With the induction of Noel Tata as the new chairman of Tata Trusts, the Shapoorji Pallonji group is understood to be keen to push for a listing of Tata Sons, even as the Tata group is doing everything possible to keep it unlisted and privately owned, sources said.
The Tata group will ensure that Tata Sons will never be listed, said sources with knowledge of developments.
De-registration Process
Tata Sons has already started the process to de-register itself as a core investment company with the Reserve Bank of India. It has applied to the RBI for the voluntary surrender of its certificate of registration as a CIC and to continue as an ‘unregistered CIC’. It has retired bulk of its debt and without public funds, a CIC such as Tata Sons would not need to be registered with RBI.
However, the SP group that has been in favour of listing of the holding company has not changed its stance, said sources with direct knowledge of developments. While these are early days, sources said that there’ll be a renewed push for a listing.
Tata Sons and SP group did not respond to emails sent seeking clarification.
Debt challenges
The SP group has been struggling with debts for a long while now and an opportunity to monetise its stake in Tata Sons through a public listing would solve a good part of its problems. It is raising funds by listing key group firms such as Afcons Infrastructure, which is listed today. The next on the list is SP Real Estate, but that is still two years away. Last year the group sold a part stake in PNP Port to the JSW group.
A promoter entity Goswami Infratech, recently had to extend the date for an interest repayment that was due on September 30, to December 31, 2024. The group is also at an advanced stage to refinance the debt that it had raised by pledging a stake in a promoter-level entity Sterling Investment Corporation, which holds a stake in Tata Sons.
Noel Tata helming Tata Trusts, which holds a majority 66 per cent stake in Tata Sons, is seen as changing the dynamics between the two groups, which had soured somewhat during Cyrus Mistry’s tenure. The balance is seen shifting and sources said that the SP group feels things may be more favourable for it. Noel Tata is related to the promoter family of the SP group by marriage.
In September 2022 under RBI’s new scale-based regulations for NBFCs, Tata Sons had been classified as an Upper Layer NBFC. This was a newly created category of NBFCs, seen as systematically significant and requiring almost bank-like supervision. One of the requirements attached to such entities was they had to be listed within three years of such classification.
The scale-based regulations are based on a number of metrics that include size, leverage, financial interconnectedness, complexity, nature and size of liabilities, group structure and segment penetration.
According to experts, the top 10 eligible NBFCs in terms of their asset size will always reside in the upper layer, irrespective of any other factor. Once an NBFC has been moved to the UL, it will be subject to stringent regulatory provisions for at least five years from its classification in this layer, even if it does not meet the parametric criteria in subsequent years.
