Tata Chemicals, TMPV Shares Fall as Tata Trusts Proposes New Route to Keep Tata Sons Unlisted

Shares of several Tata Group companies fell on Tuesday, September 29, after Tata Trusts proposed a restructuring of Tata Sons that could allow the holding company to remain unlisted. 

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At 10 am, Tata Chemicals was trading 3% lower at ₹622.55. Tata Motors Passenger Vehicles (TMPV) was also down 3%, while Tata Investment Corporation had declined 2.2%. 

The fall came a day after Tata Trusts proposed merging Tata Electronics Systems and Tata Consulting Engineers with Tata Sons. The proposal is aimed at changing the nature of Tata Sons from a company primarily holding investments to one with a sizeable operating business. 

Why the proposal matters for Tata Sons 

Tata Sons was classified as a core investment company, or an upper-layer non-banking financial company, in 2022. This brought the group holding company under increased regulatory supervision by the Reserve Bank of India. 

Earlier in September, the RBI rejected Tata Sons’ application to deregister as a non-bank lender, bringing the question of a public listing back into focus. 

The restructuring proposed by Tata Trusts offers another possible route. 

By merging the two operating businesses into Tata Sons, the resulting company would have substantial operating revenue alongside the income it receives from financial assets. 

According to figures provided by Tata Trusts, the merged entity would have operating revenue of ₹1.05 lakh crore, compared with ₹40,072 crore of income from financial assets. Operating revenue would account for 64.3% of the amalgamated entity’s total income. 

The proposal has been submitted to the Tata Sons board. It will require the board’s consent before it can be taken to the RBI. 

Listed Tata companies hold stakes in Tata Sons 

The possibility of a Tata Sons listing has also drawn attention to listed Tata Group companies that own stakes in the holding company. 

Tata Steel and Tata Motors Passenger Vehicles each hold 3.06% in Tata Sons, while Tata Chemicals owns 2.53%. 

Tata Power has a 1.65% holding, followed by Indian Hotels at 1.11%. Tata Consumer Products owns 0.4%, while Tata Investment Corporation holds 0.25%. 

Tata Trusts itself holds a 66% stake in Tata Sons. 

The latest proposal could change the path ahead for Tata Sons if it receives the necessary approvals. For now, however, it remains a proposal placed before the Tata Sons board, with the next step dependent on its consent before the matter can be taken to the central bank.