With the induction of Noel Tata as the new chairman of Tata Trusts, the Shapoorji Pallonji Group appears to be pushing for a listing of Tata Sons, even as the Tata Group is doing everything possible to keep it unlisted and owned by sources private. said.
The Tata Group will ensure that Tata Sons is never listed, sources close to the matter said.
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Tata Sons has already started the process of deregistration as a principal investment company with the Reserve Bank of India. It has applied to the RBI for voluntary surrender of its certificate of registration as a CIC and its continuation as an “unregistered CIC”. It has repaid most of its debt and without public funds, a CIC like Tata Sons would not need to be registered with the RBI.
However, the SP group, in favor of the listing of the holding company, has not changed its position, indicated sources directly informed of the development of the situation. Although it is early days, sources have indicated that there will be renewed pressure for a listing.
Tata Sons and SP Group did not respond to emails sent seeking clarification.
Debt Challenges
The SP Group has been saddled with debt for a long time and the ability to monetise its stake in Tata Sons through a public listing would solve a lot of its problems. It raises funds by listing key group companies, such as Afcons Infrastructure, listed today. Next on the list is SP Real Estate, but that’s still two years away. Last year, the group sold part of PNP Port to JSW Group.
Promoter entity Goswami Infratech recently had to extend the interest repayment date, which was due on September 30, to December 31, 2024. The group is also at an advanced stage to refinance the debt it had incurred by pledging a stake in a promoter level entity, Sterling Investment Corporation, which holds a stake in Tata Sons.
Noel Tata, the head of Tata Trusts, which holds a controlling stake of 66 per cent in Tata Sons, is seen as a change in the dynamic between the two groups, which had deteriorated somewhat under Cyrus Mistry’s tenure. The balance appears to be shifting and sources have indicated that the SP Group believes things could be more in its favor. Noel Tata is linked by marriage to the family behind the SP group.
As of September 2022, under the RBI’s new scale-based regulations for NBFCs, Tata Sons had been classified as an upper tier NBFC. This was a newly created category of NBFC, considered systematically important and requiring almost bank-like supervision. One of the requirements attached to these entities was that they had to be listed within three years of this classification.
Scale-based regulations rely on a number of metrics, including 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 asset size will always reside in the top layer, irrespective of any other factors. Once an NBFC is moved to the UL, it will be subject to strict regulatory provisions for at least five years from its classification in this tier, even if it does not meet the parametric criteria in subsequent years.
