The two major shareholders of Tata Sons – Tata Trusts and the Shapoorji Pallonji (SP) group — are believed to be in advanced talks to hammer out an exit route for the latter. “Listing of Tata Sons, which the SP group had demanded, is certainly not an option. Both side are looking at other routes through which SP can have at least a partial exit from its 18.6% stake position n Tata Sons,” sources familiar with the developments said, without divulging details.
Battling debt issues, the SP group has been insisting on a public share sale to monetise its stake, which the Tatas have declined.
Ahead of the annual general meeting on August 14 this year, Tata Sons chairman N Chandrasekaran had met Shapoor Mistry, the chairman of the SP group, to discuss the way forward. This was immediately after the Noel Tata-led Tata Trusts directed the Tata Sons chairman to consider all options so that the holding company of the Tata group stays private. The Trusts also asked him to facilitate SP group’s exit from the group. There have been several rounds of talks between the two since then on a viable route.
When did the talks accelerate?
The talks have of late gained pace after the Reserve Bank of India made it clear that it is not opposed to Tata Sons’ request for deregistration of its upper layer non-banking financial company (NBFC) status, provided Tata Trusts, which owns 66.8% stake in Tata Sons, and the SP group, which is the second largest shareholder in the conglomerate, present a unified face on keeping Tata Sons as a private entity. The regulatory deadline for upper layer NBFCs to go public expired on Tuesday, but the regulator is believed to be open to giving some more time to both the parties to come to a unanimous decision on the issue. “If both of them agree to Tata Sons not going private and seek withdrawal of the NBFC tag, the RBI would have no problem. But a definite timeline must be set”, the sources said.
While neither RBI, nor Tata Sons provided any clarity on the issue even as the deadline expired, sources said that Tata Sons has already applied to the RBI to extend the listing deadline and has 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.
Relation between TATA and SP
The relationship between the two factions has been acrimonious ever since Cyrus Mistry was ousted as Tata Sons chairman, and later from all Tata group companies, in October 2016. But there have been signs of thaw in recent times.
According to the scale-based regulatory framework, RBI has classified large NBFCs (NBFC-BL) or base layer, middle layer (ML), upper layer (UL) and top layer (TL) based on their asset size. The new framework demands all upper layer NBFCs to be publicly listed before September 30, 2025.
In the last notification, which appeared in January 2025, the central bank said Tata Sons’ application was under consideration, and that its inclusion on the list was “without prejudice” to the outcome of its application, meaning the deadline isn’t impacted by the application.