- Noel Tata proposes Tata Sons restructuring instead of a public listing.
- Suggestion addresses RBI's new upper-layer NBFC classification
- The board meeting saw differing opinions on the company's strategic path.
Tata Trusts Chairman Noel Tata has suggested that Tata Sons should consider restructuring options instead of listing its holding company, including splitting the company into multiple parts to meet Reserve Bank of India (RBI) requirements. According to media reports, the board raised this proposal at its September 17 meeting, but it is unclear whether it will consider it.
Noel Tata's Opposition
Tata Trusts, the largest shareholder in Tata Sons, believe the holding company should remain unlisted and is considering options to meet RBI requirements without going public. The September 17 board meeting revealed sharp differences between Noel Tata and the remaining Tata Sons board members as the majority voted in favour of reappointing N. Chandrasekaran as chairman. Noel Tata opposed both these steps.
There was no voting
RBI, earlier this month, classified Tata Sons as an 'upper-layer non-banking finance company' (NBFC), subjecting it to stricter regulatory rules. According to media reports, Tata Sons is considering the implications of this classification and its options.
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The report also revealed that no voting took place on the proposal related to the RBI directive, although the matter was discussed at length. Tata suggested that both parties should form a team to examine the matter in detail.
How could a split happen?
- As per reports, Tata Group could restructure Tata Sons in several ways. These include a demerger, transfer of assets to a subsidiary, a merger, or a comprehensive scheme of arrangement.
- Given the large size of Tata Sons, experts believe that any such process could face significant regulatory, commercial, and tax challenges.
- Tata Sons holds various Tata Group businesses, including Tata Consultancy Services, Tata Motors, Tata Steel, Tata Capital, Tata Communications, Tata Consumer Products, Tata Investment Corporation, Air India, Tata Digital, Tata Electronics, and Agratas.
With Inputs From jagran.com