In a move that could queer the pitch for a consensus between the Tata group and the Shapoorji Pallonji (SP) group, the latter on Friday said a public listing of Tata Sons is a “moral and social imperative”. Tata Sons is the holding company of the Tata group’s 25 listed companies with a combined market cap of Rs 26.5 lakh crore (around $300 billion).
The Tatas have so far strongly resisted any move to list Tata Sons, with Tata Trusts Chairman Noel Tata reportedly asking Tata Sons Chairman N Chandrasekaran that while the holding company should remain private, he should work out a formula that gives an exit to the SP group, which is the second largest shareholder with 18.6% stake. Chandrasekaran, in fact, met Shapoorji Mistry, chairman of the SP group, on the issue, ahead of the annual general meeting on August 14 this year, leading to rising hopes that the two sides would work out a peace formula in the form of a partial exit.
Transparency, value, and debt pressure
However, the SP group, which has seen its debt piling up, is obviously in no mood to relent. The promoters of the group has been battling debt issues – Rs 30,000 crore at last count – and has been demanding an exit through public listing of Tata Sons for quite some time.
Terming the recent rift in Tata Trusts as an “internal matter”, the group said its long-standing position on listing of Tata Sons “has always been rooted in transparency, fairness, public interest, and adherence to the principles of good corporate governance”.
The listing, the group said, will unlock immense value for over 120 million shareholders of listed Tata companies, who are indirect shareholders of Tata Sons. “Our stance is guided by a simple yet profound belief – transparency is the truest form of respect for both legacy and the future,” the group said.
The group said the Reserve Bank of India (RBI) on whom it has “full faith” will act on its September 30 deadline of complying with the scale-based regulatory framework which clearly articulates that “a non-banking financial company (NBFC) should not act in a manner detrimental to the interests of its investors”.
India’s central bank had earlier classified Tata Sons as an upper-layer NBFC, a label that requires it to go public. Some of the Tata trustees worry is that an IPO would erode their veto rights and expose the company to takeover risks and stricter governance rules.
Tata Sons was, however, expecting the RBI to exempt the group’s holding company from a mandatory share sale. On its part, the RBI has reportedly made it clear that it is not opposed to Tata Sons’ request for deregistration of its upper layer NBFC status, provided Tata Trusts, which owns 66.8% stake in Tata Sons, and the SP group present a unified face on keeping Tata Sons as a private entity. Those hopes are now dashed after the SP group’s latest missive.
Tata Sons had sought relaxation from the listing norms on the ground that as a private limited company, it is not obliged to comply with the RBI’s listing guidelines. Tata Sons has already met almost all the regulatory conditions to remain an unlisted company. In August 2024, it surrendered its NBFC licence after paying back all its debt and turned a cash-positive company by March 2024—the most important criterion to be private company under the RBI norms for large non-banks. Tata Sons had repaid over Rs 20,300 crore in debt between March 2023 and March 2024, leaving only a small amount of non-convertible debentures and preference shares, and thus meeting one of the main conditions to remain a private, closely-held company, which provides it with greater strategic flexibility and control over its operations.
In its release, the SP group also pointed out that a transparent and publicly accountable Tata Sons would pave the way for a robust and equitable dividend policy, thereby ensuring sustained inflows to the Trusts. These funds, true to the founding vision of the Tatas, can then be dedicated to the welfare of the poor, the upliftment of communities, and the service of the nation.
“Our position is in not in conflict, but completely in consonance, with the ideals of Shri Jamsetji Tata, whose vision was that of an enterprise serving the nation with openness, accountability, and compassion,” the group said.
Pointing out that the SP group’s relationship with the House of Tatas spans generations, built on mutual respect and shared heritage, it said the group remains fully committed to playing a constructive role alongside Tata Trusts and Tata Sons, in shaping a future that upholds the legacy of both the founding families.