RBI's decision on listing Tata Sons would offer clarity on way forward

All eyes seem to be on the Reserve Bank of India (RBI) for its decision on whether Tata Sons needs to go for public listing or not, as the deadline set by the regulator for the market debut of the holding company of the steel-to-software conglomerate expired on September 30. The customary monetary policy press conference on Wednesday offered a glimpse into the curiosity around the matter with the RBI governor being asked, among a volley of other questions, about Tata Sons’ listing. Without giving away anything on whether Tata Sons has been given an exemption from listing, Governor Sanjay Malhotra only said that an entity which had a registration could do business till it was cancelled. 

 

But, does the future of Tata Sons really rest on whether or not the RBI grants it an exemption? On the face of it, yes, as the world waits to hear the verdict from Mint Road. The reality, however, may not be that simple. Consider the timeline of the developments related to the matter. Exactly three years ago, in October 2022, the RBI classified Tata Sons as an upper-layer non-banking financial company (NBFC), asking it to list by the end of September this year. As the approaching deadline loomed, Tata Sons filed an application to surrender its NBFC-Core Investment Company (CIC) registration. It followed up by clearing its debt, a condition to be de-classified as an NBFC-CIC, in August last year. The move by Tata Sons in 2024 was to seek an exemption from listing. The application has been pending with the RBI. 

If you look at it more closely, 2022 to 2025 is a long time in the history of the Tata group with a lot changing in these intervening years. For instance, if in 2022 a potential listing was a significant concern for Tata Sons, and in 2024 it was looking at ways to avoid it, it may well be favourably inclined towards such a possibility at this point. Tata Sons’ biggest shareholder, Tata Trusts, reportedly appears to be a divided house with the trustees resorting to voting to decide who will be the Tata Trust nominees on the board of Tata Sons and who should be replaced. Against such a backdrop, Tata Sons may like to protect itself from Tata Trusts, which is seemingly looking to strengthen its oversight of the holding company of the conglomerate. Tata Trusts holds around 66 per cent in Tata Sons.   

What has changed since October 2022, when the RBI diktat came, or even March 2024, when Tata Sons applied to the regulator to surrender its NBFC-CIC registration? Under Ratan Tata, Tata Trusts, which he chaired, did not show any signs of being a divided house. So, until he died in October 2024, the view of the largest shareholder (Tata Trusts) and that of Tata Sons on the listing of the holding company may have been the same: To remain a private entity and resist reporting complexities associated with public listing. Just to put things in perspective, Tata Sons has not made any statement on listing over recent months. However, Tata Trusts has made it amply clear that it is against such a listing and has also advised Tata Sons on that matter through a resolution. 

While Tata Trusts spoke in one voice under Ratan Tata, his tenure as chairman emeritus of the Tata group saw the conglomerate with a $400-billion market cap fighting a prolonged legal battle over the ouster of Cyrus Mistry as Tata Sons chairman in 2016. The issue at the centre of one of the biggest corporate battles was alleged mismanagement in the group under Mistry and the trust deficit between the two sides — the Tatas and the Shapoorji Pallonji group. Mistry, who died in 2022, was the scion of the Shapoorji Pallonji group, the second-largest shareholder in Tata Sons. Shapoorji Pallonji strongly favours Tata Sons’ listing because that may help revive the business group through a dilution of its stake, currently at around 18 per cent.    

If Tata Sons indeed goes for listing, it would, in all probability, be able to contain any attempt, if at all, at overreach or control by its largest shareholders. Of course, there’s no clarity yet on who will shed how much in case Tata Sons is listed or if there would be legal tangles on the road to its market debut, but it’s important to know what Tata Sons, under chairman N Chandrasekaran, wants. Clarity on Tata Sons’ position on listing, as of 2025, would help define the future of the group better, irrespective of the RBI stand. As of now, the ball is in the RBI’s court, and everyone is watching the space.