NA Soonawala, former vice-chairman of Tata Sons, has argued that listing Tata Sons could fundamentally weaken the company’s long-standing role as the custodian and stabilising force of the Tata Group, warning that public shareholders focused on financial returns may not support the kind of long-term and group-wide interventions the holding company has historically undertaken.
Soonawala questioned the rationale behind compelling Tata Sons to list primarily because its asset size exceeds the regulatory threshold of Rs 1 lakh crore for upper-layer NBFCs. He noted that the company has historically complied with RBI directives by restructuring operations whenever required — including repaying borrowings, redeeming preference shares and divesting non-group investments.
Stewardship vs Commercial Returns
Soonawala added that Tata Sons has, over decades, acted not merely as a holding company but as a promoter of group values and a financial backstop during periods of stress. He cited examples ranging from Sir Dorabji Tata pledging personal assets to save Tata Steel to Ratan Tata pushing Tata Sons to honour obligations to NTT Docomo and address liabilities at Tata Finance. According to him, such decisions were driven by reputation, stewardship and long-term trust rather than purely commercial considerations.
He argued that a listed Tata Sons would be answerable to institutional and foreign investors who may resist deploying capital to support struggling group companies or long-gestation businesses. This, he said, could weaken the group’s internal support system and alter the character of the holding company.
Bad Strategic Timing
He further cautioned that the timing for an IPO may be unfavourable given the group’s significant financial commitments, including Air India, investments in greenfield projects and losses in newer ventures. Full disclosure of these exposures in an IPO prospectus, he argued, may not appeal to investors.
On the argument of liquidity for minority shareholders, Soonawala said the strongest push has effectively come from the Shapoorji Pallonji Group, though he maintained that a demand from a single shareholder group was insufficient reason for a move with such wide-ranging implications for Tata Sons and the broader Tata Group structure.
Soonawala also dismissed arguments that listing would unlock significant value or materially improve governance. He pointed out that listed holding companies typically trade at steep discounts to net asset value, while governance failures have occurred even in publicly traded firms.
He added that both Tata Trusts and Tata Sons have opposed listing, and said forcing such a move could undermine a structure that has blended commercial success with philanthropy and long-term stewardship for over a century.