The differences among the top management of the group have deepened on the issue of listing Tata Group’s parent company ‘Tata Sons’ in the stock market. Tata Trust Chairman Noel Tata is against this listing, while two senior members of the trust are in favor of launching an IPO citing RBI rules. To understand this entire controversy and its impact, read this QA: 1. What is the main reason for the controversy in Tata Group? Tata Trust holds two-thirds stake in Tata Sons. The root of the controversy is the IPO of ‘Tata Sons’. Two trustees of Tata Trusts, Venu Srinivasan and Vijay Singh, want Tata Sons to be listed in the stock market. He believes that this will bring transparency in the company. At the same time, Noel Tata still wants to keep Tata Sons a ‘closely held’ i.e. private company. 2. What does the new RBI rule say regarding listing? According to the new RBI rules, Tata Sons will be considered a ‘systemically important’ shadow bank (NBFC) from July 1, 2026. The rule is that if the asset size of a shadow bank is more than Rs 1 lakh crore, then it is mandatory for it to be listed in the stock market. Tata Sons falls in this category. 3. Has Tata Group tried to avoid listing before? Yes, this is not the first time. Even in 2022, RBI had categorized Tata Sons as ‘upper-layer’ NBFC and given it a time of three years. The group then postponed the listing by restructuring its debt and calling itself ‘non-systematic’. But now RBI has closed those avenues. 4. What is expected to happen in the May 8 board meeting? An important meeting of Tata Trusts is going to be held on 8th May. According to sources, Venu Srinivasan and Vijay Singh may propose to start preparations for official listing in this meeting. Apart from this, there will also be a discussion on choosing a new trustee nominee on the board of Tata Sons. 5. Why is Noel opposing Tata listing? Tata Trust holds two-thirds stake in Tata Sons. Noel Tata fears that listing may reduce the control of Tata Trusts over the group companies. He wants the Trust’s hold on Tata Sons to remain as strong as before. There were also reports in February that he had met Tata Sons Chairman N. A guarantee was sought from Chandrasekaran that the company would not be listed. 6. Chairman N. What is Chandrasekaran’s stand on this? According to reports, when Noel Tata asked Chandrasekaran for a guarantee of non-listing, he refused to give such a promise. His argument was that this is a regulatory matter. For this reason, voting on the re-appointment of Chandrasekaran for the third term was also postponed. 7. Can RBI give any special relaxation to Tata Group? The possibility of this is very less. RBI has informally indicated that it will not make any exceptions to the rules for Tata Group. The regulator believes that if Tata is given exemption, other companies will also make similar demands, which will weaken banking rules. 8. If Tata Sons IPO comes, who will benefit the most? The biggest beneficiary of this will be ‘Shapoorji Pallonji (SP) Group’. The Mistry family holds 18.4% stake in Tata Sons. Shapoorji Pallonji Group is heavily in debt and has mortgaged its stake. Listing will unlock the value of their stake and they will be able to repay their loan. 9. What effect will this have on the net worth of Shapoor Mistry family? According to Bloomberg Billionaires Index, the net worth of Shapoor Mistry, who runs SP Group, is around $32 billion. The special thing is that 75% of his wealth is stuck in the stake of Tata Sons, which he cannot sell right now. The listing will prove to be a ‘game changer’ for them. 10. What’s going to happen next? The picture will become clear in the next two months. Tata Sons is currently taking informal advice from the regulator and may try to extend the deadline. If the trustees dominate the May 8 meeting, we could see the biggest IPO in India’s corporate history. Knowledge Part:
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Differences among Tata Trusts on Tata Sons listing: Noel against Tata IPO, two trustees in favor of listing; Decision may be taken on May 8
