The Tata Trust board is met today to discuss key trust-related matters. Amid reports of government intervention after untimely exit of Tata Trusts member to rift with Shapoorji Pallonji (SP) Group over the public listing of Tata Sons, all eyes have been on what really transpired behind the closed doors.
There was no official comment made about sources have told financial express that Tatas are looking at allowing a partial exit to the SP group. It currently holds 18% stake in Tata Sons and is the second largest shareholder after the Trusts which hold 66% stake. SP Group currently holds about an 18.4% stake in Tata Sons through two entities.
The SP Group has been pushing for the listing to enable liquidation of part of its stake. Meanwhile, Tata Sons has been against going public.
Here is why Shapoorji Pallonji (SP) Group wants Tata sons’ listing
According to Moneycontrol, The Shapoorji Pallonji (SP) Group has pledged its entire stake in Tata Sons as collateral for the loan in order to pay around $1.2 billion (nearly Rs 10,000 crore) of debt due by December.
A listing would allow the SP group to sell its stake in the open market, ensuring better price discovery. It would also be more tax efficient, attracting around 12 per cent capital gains tax, compared with nearly 36 per cent if Tata Sons were to buy back the stake directly.
However, according to PTI, Tata Trusts has applied to the Reserve Bank of India (RBI) seeking voluntary surrender of its CIC registration and permission to continue as an unregistered CIC. The application is currently under RBI’s review.
The group, which earlier refinanced about $3.2 billion of its borrowings, has to repay both principal and interest within the next two months. The Mistry family’s promoter-level debt is estimated at Rs 25,000–30,000 crore — about half of the SP Group’s total consolidated debt of Rs 55,000–60,000 crore.No official announcement has been made so far.
Tata Trusts see internal split over key board appointments
Tata Trusts are reportedly split into two groups — one led by chairman Noel Tata and vice chairman Venu Srinivasan, and the other by trustees Mehli Mistry, Pramit Jhaveri, Jehangir HC Jehangir, and Darius Khambata.
Other reason of the rift includes re-appointment od Vijay Singh, as a nominee director on the Tata Sons board. And appointment of Mehli Mistry, who has family ties to the Shapoorji Pallonji Group, to the Tata Sons board.