The delay in approving Tata Sons’ Rs 4,479-crore dividend could cost the Tata Trusts around Rs 56 lakh a day in potential investment income, even as the Trusts are unlikely to approach the Bombay High Court for relief from the restriction on the Sir Ratan Tata Trust (SRTT) holding meetings, people with knowledge of the proceedings said.
The Tata Sons annual general meeting on August 18, which was expected to consider the declaration of the dividend, was adjourned for want of quorum. Of the total dividend recommended by the Tata Sons board, around Rs 2,900 crore is attributable to the Tata Trusts, which collectively hold about 66% of the holding company.
At an assumed annual return of 7%, Rs 2,900 crore would generate potential investment income of around Rs 55.6 lakh for every day it remains unavailable. A delay of 60 days would translate into around Rs 33.4 crore in potential foregone income, while every additional week could cost approximately Rs 3.9 crore. If the delay stretches to six months, the potential income foregone could exceed Rs 100 crore.
“For the Trusts, the loss is not merely an accounting cost. The income from their investments is used to fund philanthropic activities. A prolonged delay could therefore affect the funds available for their charitable mission,” one of the persons cited above said.
Separately, around Rs 400 crore belonging to SRTT is understood to remain stuck and unavailable for disbursement. The money is intended for charitable programmes, including those related to water and sanitation, education and feeding.
The financial consequences of the delay are also raising questions about whether all available avenues are being pursued to protect the Trusts’ interests. These questions have arisen in the context of SRTT having a senior counsel on its board and reports that caveats had been filed before the restriction was imposed.
However, the Tata Trusts is understood to favour a wait-and-watch approach amid concerns that moving court could draw the issue into a longer legal process. “There has been no indication of a negative outcome and so, the Trusts would rather wait than go to the High Court at this point,” a person with knowledge of the matter said.
The Trusts have already sought relief from the restriction, including through a letter to the charity commissioner of Maharashtra, but the effort has not yielded a decision so far. They could make another attempt through a further letter in the coming days, one of the persons said.
The proceedings are also believed to have been delayed after the additional commissioner handling the matter was transferred and a new official took charge. The change may have set the proceedings back by around two months, another person familiar with the matter said.
While the effects of the restriction are widening, the Trusts believe approaching the High Court could delay the process further. The court would need to examine the matter afresh, potentially extending the process by as much as another six months, the person said.