His current term is scheduled to end in February 2027.
Tata Sons’ board has cleared the proposal for public listing of the salt-to-automobile behemoth and backed a five-year extension for its Chairman, N Chandrasekaran (“Chandra”), who just weeks ago had said he wouldn’t seek another term of chairmanship.
Tata Sons deciding to go public, finally, is the culmination of a series of events that played out alongside the company’s efforts for over a year to avoid a stock market listing. But the Reserve Bank of India (RBI) recently rejected Tata Son’s application to surrender its non-banking financial company (NBFC) registration. That meant Tata Sons would need to comply with the regulatory framework for top NBFCs. In other words, go public.
It had even repaid Rs 21,000 crore in debt to get out of any situation including those linked to regulatory matters that could make listing inevitable.
But these are issues that can be managed through appropriate disclosure and governance frameworks. Second, a public listing may ensure liquidity for non-Trust shareholders, including Shapoorji Pallonji Group and listed Tata group firms. And third, a listed Tata Sons would be able to raise public debt and equity to be used for joint ventures and acquisitions, instead of depending only on internal resources. Since February, he has been opposing any step towards a direction that could take the company public.
Noel Tata, chairman of Tata Trusts, along with affiliated trusts controls about 66 per cent of Tata Sons.
Independent firm InGovern Research in a report said Tata Sons’ listing could lead to more disclosure requirements, intense market pressure, higher compliance costs and even raise concerns around commercially sensitive information.
Tata Sons’ board approving the proposal for a public listing in a way addresses the RBI’s recent observations and actions. For now nothing is known about the potential listing timetable, appointment of legal and investment banking advisers, future of Tata Trusts’ special rights and liquidity for non-Trust shareholders, among others.
