Tata Trusts passed resolutions affirming Tata Sons should remain an unlisted private company, and initiate discussions with minority shareholder Shapoorji Pallonji (SP) Group to provide it an exit, marking a key strategic shift. This followed a day-long meeting on Monday, attended by all trustees and marked by intense discussions, said people with knowledge of the matter. Tata Sons is the holding company of the group.
“Tata Sons chairman is requested to exercise best endeavours to ensure Tata Sons does not change its current status as an unlisted private company and fully engages with the Reserve Bank of India in this regard,” said the resolution passed by the board of the Sir Ratan Tata Trust (SRTT) that was reviewed by ET.
SRTT and the Sir Dorabji Tata Trust are the two main philanthropic organisations that make up Tata Trusts, which own a controlling 66% stake in Tata Sons. People aware of developments said the Trusts board also approved initiation of the process to renew the term of N Chandrasekaran as chairman of Tata Sons beyond February 2027.
“It was agreed at the meeting to requestthe chairman of Tata Sons to explore all possible avenues for ensuring there was no change in the status of Tata Sons as it currently stood. This included a dialogue with the minority shareholders, that is, SP Group, for providing an exit to them from Tata Sons,” the resolution said. “The chairman is also requested to keep SRTT informed of progress on these matters.”
A mail sent to Tata Trusts did not receive a response till time of going to press.
The move is significant and would have a bearing on the fortunes of SP Group, which is burdened with debt. It has pledged its entire 18.37% stake in Tata Sons to raise funds to service some of this debt. Lenders to SP Group will have to offer the first right of refusal to Tata Sons under the holding company's Articles of Association, if these pledges were to be invoked.
Chandrasekaran staying on is seen as vital for continuity as Tata Sons ramps up investments in new sectors. The group is injecting Rs 30,000 crore into emerging businesses such as Tata Digital, Tata Electronics and Air India, besides its defence and battery units. This is in addition to the $120 billion already committed in recent years.
Group to group
The resolution on seeking a way to give SP Group an exit signifies a change in stance. Ties with SP Group had soured over the ouster of the late Cyrus Mistry as Tata Sons chairman in October 2022. He was a member of the family that founded and runs SP Group.
Tata group’s total FY25 revenue was Rs 15.34 lakh crore, with net profit at Rs 1.13 lakh crore and a market cap of Rs 37.84 lakh crore. Tata Sons itself reported a 24% rise in revenue to Rs 5.92 lakh crore, while net profit fell 17% to Rs 28,898 crore. No reason was cited for the decline. However, its dividend payout doubled to Rs 1,414.5 crore, from Rs 707.2 crore in FY24. Tata Sons had 323 subsidiaries, 39 associates and 32 joint ventures in FY25.
SP Group earlier this year urged RBI to push for a public listing of Tata Sons, arguing that it would benefit all stakeholders. Tata Sons was classified as an upper layer NBFC (NBFC-UL) in September 2022, mandating it to list by September 2025. The company has since applied to RBI for deregistration and exemption from listing.
“Tata Sons chairman is requested to exercise best endeavours to ensure Tata Sons does not change its current status as an unlisted private company and fully engages with the Reserve Bank of India in this regard,” said the resolution passed by the board of the Sir Ratan Tata Trust (SRTT) that was reviewed by ET.
SRTT and the Sir Dorabji Tata Trust are the two main philanthropic organisations that make up Tata Trusts, which own a controlling 66% stake in Tata Sons. People aware of developments said the Trusts board also approved initiation of the process to renew the term of N Chandrasekaran as chairman of Tata Sons beyond February 2027.
“It was agreed at the meeting to requestthe chairman of Tata Sons to explore all possible avenues for ensuring there was no change in the status of Tata Sons as it currently stood. This included a dialogue with the minority shareholders, that is, SP Group, for providing an exit to them from Tata Sons,” the resolution said. “The chairman is also requested to keep SRTT informed of progress on these matters.”
A mail sent to Tata Trusts did not receive a response till time of going to press.
The move is significant and would have a bearing on the fortunes of SP Group, which is burdened with debt. It has pledged its entire 18.37% stake in Tata Sons to raise funds to service some of this debt. Lenders to SP Group will have to offer the first right of refusal to Tata Sons under the holding company's Articles of Association, if these pledges were to be invoked.
Chandrasekaran staying on is seen as vital for continuity as Tata Sons ramps up investments in new sectors. The group is injecting Rs 30,000 crore into emerging businesses such as Tata Digital, Tata Electronics and Air India, besides its defence and battery units. This is in addition to the $120 billion already committed in recent years.
Group to group
The resolution on seeking a way to give SP Group an exit signifies a change in stance. Ties with SP Group had soured over the ouster of the late Cyrus Mistry as Tata Sons chairman in October 2022. He was a member of the family that founded and runs SP Group.
Tata group’s total FY25 revenue was Rs 15.34 lakh crore, with net profit at Rs 1.13 lakh crore and a market cap of Rs 37.84 lakh crore. Tata Sons itself reported a 24% rise in revenue to Rs 5.92 lakh crore, while net profit fell 17% to Rs 28,898 crore. No reason was cited for the decline. However, its dividend payout doubled to Rs 1,414.5 crore, from Rs 707.2 crore in FY24. Tata Sons had 323 subsidiaries, 39 associates and 32 joint ventures in FY25.
SP Group earlier this year urged RBI to push for a public listing of Tata Sons, arguing that it would benefit all stakeholders. Tata Sons was classified as an upper layer NBFC (NBFC-UL) in September 2022, mandating it to list by September 2025. The company has since applied to RBI for deregistration and exemption from listing.
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