Noel Tata Proposes Major Reorganization to Prevent Tata Sons Listing

Mumbai Business Developments

Mumbai: Noel Tata has reached out to Tata Sons with a proposal for a business reorganization aimed at preventing the listing of the conglomerate's holding company. This plan is also linked to the Shapoorji Pallonji Group's partial exit, which is expected to generate ₹25,000 crore at the upcoming board meeting set for November 26.

In his role as a board member and chair of Tata Trusts, Noel has sent two letters to Suprakash Mukhopadhyay, the secretary of Tata Sons. Sources indicate that any board member can request an agenda item with a 15-day notice.

Despite attempts to obtain comments from both Noel Tata and Tata Sons regarding this development, no immediate responses were received.

The first letter requests a discussion and vote on the reorganization plan, which proposes merging Tata Electronic Systems and Tata Consulting Engineers into Tata Sons Private Limited. This move aims to prevent the listing of the group's holding company, which the RBI classifies as a core investment company rather than an operational entity.

Noel's correspondence also addresses a letter from the RBI dated September 11, which mandates the listing of Tata Sons by rejecting the de-registration application. Following this, two major trusts under Tata Trusts submitted the reorganization proposal on September 26.

According to the proposal, Tata Sons would transition into an operating company through the merger of its electronics and engineering divisions, thereby ceasing to be classified as an NBFC-CIC, which is subject to the regulator's listing requirements.

The listing issue of Tata Sons is central to the ongoing disagreements between Noel and the Tata Sons board, which previously voted in favor of complying with the RBI's directive during a meeting on September 17.

Noel's faction emphasizes the importance of maintaining the integrity of the 150-year-old conglomerate, arguing that its private nature alleviates investor pressure for immediate returns and allows for long-term investments. Conversely, Tata Sons management insists on adhering to regulatory mandates.

Should Tata Sons approve the reorganization plan, the amalgamation would require approvals from the RBI, the National Companies Law Tribunal, and the Ministry of Corporate Affairs.

Noel's letters follow a busy week that began with discussions between him and Tata Sons chairman N Chandrasekaran at Noel's residence in South Mumbai. This was succeeded by a letter from Noel challenging Chandrasekaran's reappointment as chairman, which has since drawn political attention, with Opposition Leader Rahul Gandhi criticizing government interference in the situation.

In his second letter, Noel requests updates from Tata Sons regarding the SP Group's proposal for a partial exit to raise ₹25,000 crore, seeking clarity on how this proposal has been assessed and including a draft resolution in the annex.