Tata Group and Mistry family, both parties navigate this delicate situation, the future of one of India’s most iconic corporate groups remains uncertain.
The Mistry family owns an 18.4% stake in Tata Sons, the holding company of India’s largest industrial conglomerate, Tata Group. However, the relationship between the two groups has been strained for years, primarily due to the ousting of Cyrus Mistry from the position of chairman of Tata Sons.
Mistry Family Stake In Tata Sons
The Shapoorji Pallonji (SP) Group, controlled by the Mistry family, holds an 18.4% stake in Tata Sons. The group is reportedly pushing for the listing of Tata Sons to unlock the value of their stake. Amid this pressure, Tata Sons is exploring multiple options, including a public listing, partial stake sale, or buying out minority shareholders. However, no immediate decisions are expected as the Tata Trusts, which hold 66% of Tata Sons, have not reached a consensus on the matter.
SP Group Debt And Financial Pressure
The SP Group is under significant financial stress, with a debt of Rs 22,000 crore ($2.64 billion) due by March 2025. To address this, the group is exploring ways to monetize internal assets and is considering listing its companies to improve liquidity and repay debts. The SP Group argues that listing Tata Sons would benefit all stakeholders, including Tata Trusts and shareholders of listed Tata companies.
Legal And Operational Challenges
Since becoming a private company in 2017, Tata Sons has restricted the free transfer of its shares. Initially, the SP Group raised funds by pledging its Tata Sons shares. However, the Tata Trusts opposed this, citing the company’s Articles of Association.
According to the Navbharat Times report, SP Group views the listing of Tata Sons as the most viable solution. However, the Tata Trusts, known for their close association with Ratan Tata, remain strongly opposed to any sale or listing. The Trusts also remain uncompromising on past allegations made against Ratan Tata and other trustees during the legal battles following Cyrus Mistry’s removal.
Regulatory Considerations By RBI For Tata Sons
Meanwhile, Tata Sons has paid off its debts to avoid being categorized under the Reserve Bank of India’s Non-Banking Financial Company-Upper Layer (NBFC-UL) list. Inclusion in this list would have required Tata Sons to list by September 2025. The RBI is currently reviewing Tata Sons’ application to be excluded from this regulatory category.
Complex Path Ahead
Given the complexity of the situation, an immediate resolution seems unlikely. Financial and legal experts are working extensively to prepare Tata Sons for various scenarios. While the SP Group favors a public listing, the entrenched opposition from the Tata Trusts and the regulatory dynamics make this a complex dispute.