Noel Tata Issues Another Statement, Speaks Out Against Tata Sons' IPO

Not just the Tata Sons chair, the public listing of the private holding firm of the Tata Group of companies is another flashpoint within the conglomerate. Tata Trusts, the largest shareholder in Tata Sons, is opposed to the holding company going public. The reason, it said, is to save the "Tata model."

Led by Noel Tata, the Trusts has asked Tata Sons to explore options other than listing on the stock market.

"The Tata Trusts have not agreed to listing of Tata Sons...the board agreed that all available options, and not listing alone, should be thoroughly explored and assessed on an immediate basis, with the findings and recommendations presented to the Board," the Trusts said.

Explainer: Tata Sons' Trust Issue: Two-Pronged Row Goes Beyond The Chair

Noel Tata argued in today's meeting that under the guidance of the late Ratan Tata, the board had in March 2024 unanimously resolved to keep the holding company unlisted.

He stated that the Tata Group was conceived as a national service carried on through business for over a century. If listed, he claimed, it will destroy the Tata Sons' character.

"That is not sentiment. It is the operating model of this House, and it has stood the test of time for more than a century. A listing will destroy its character and strike at the heart of this principle," Noel Tata noted.

While many of the Tata companies are listed on the share market, the holding company remains private.

The Reserve Bank of India (RBI) classifies Tata Sons as an 'Upper Layer' Non-Banking Financial Company (NBFC) and mandated a public listing to ensure transparency. The issue came to a head last week when the RBI rejected Tata Sons' application to surrender its company registration.

This meant that Tata Sons could no longer avoid going public.

The RBI communication was taken up in today's board meeting, during which Noel Tata told the board that public listing is not the only option and the board must "occupy the room" rather than concede it.

Read: Why Noel Tata Is Opposing N Chandrasekaran's Return As Tata Sons Chairman

The communication does not mention listing or that the company is in breach, he said at the meeting. He argued that if listed, Tata Sons would be accountable to institutional shareholders, for whom legitimate interests lie in financial returns, different from the Tata Sons' mandate.

"It is doubtful that such shareholders would sanction the deployment of capital to rescue a group company in distress or the funding of a greenfield venture whose returns lie fifteen years away...What is at stake is something very fundamental. The nature and character of the Tata Group as a unique institution," Noel Tata said.

The Shapoorji Pallonji Group, another shareholder owning 18 per cent equity in Tata Sons, wants a listing to help raise money. A proposal to monetise its stake in Tata Sons to resolve its liquidity needs was placed before the board today. The proposal says Sterling Investments Corporation Pvt Ltd and Cyrus Investments Pvt Ltd would sell enough shares they hold in Tata Sons to generate at least Rs 25,000 crore. 

Tata Sons said the board today resolved to initiate steps to comply with the applicable RBI Guidelines and guidance from RBI, Tata Trusts and other stakeholders on the compliance requirements.

If Tata Sons goes public, it is estimated to be valued at Rs 9-12 lakh crore, with an IPO size likely to exceed Rs 55,000 crore. The combined market capitalisation of the listed Tata Group companies is above Rs 30 lakh crore.