Tata Group And CaratLane Founders Lock Horns Over Residual Stake Value

Tata Group and CaratLane founders have clashed over the valuation of the remaining stake held by the latter, creating a deadlock between the parties.

What Happened? Efforts to resolve the impasse have reached Tata Sons chairman N Chandrasekaran’s office, aiming for a swift resolution, the Economic Times reported, citing sources. Titan, a Tata Group company, owns a majority stake in India’s top omnichannel jewellery brand.

The dispute stems from the long-standing relationship between CaratLane and Titan’s jewellery brand, Tanishq. Titan had gradually acquired shares in CaratLane between 2016 and 2019. However, the founders and employees of the online jewellery store still hold a 27.8% stake, leading to the current valuation disagreement.

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Under the original agreement, Titan has the option to acquire the remaining stake, while the founders have the right to sell their shares to Titan from 2023. Valuation is the core issue, and each side can appoint their own bankers for an independent valuation.

Titan has yet to exercise its call option, but recently engaged Bank of America to negotiate the remaining stake. The sources told the business daily that an initial offer valuing the entire company at ₹6,000 crore-₹7,000 crore was rejected by the founders as too low. Discussions are reportedly ongoing, and Titan may present a revised offer closer to a valuation of ₹15,000 crore.

Analysts estimate CaratLane’s equity value at around ₹23,446 crore, with strong sales of ₹2,300 crore and an earnings before taxes and interest of ₹160 crore projected for FY23.

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Posted In: EquitiesNewsAsset SalesMarketsCaratLaneTata GroupTitan