Vijay Singh. (Image/X)
AFTER TVS Group’s Venu Srinivasan, another senior trustee of Tata Trusts, Vijay Singh, has come out arguing for the listing of Tata Sons on the stock exchanges through an initial public offering (IPO).
The argument by the two trustees for listing Tata Sons, which is the principal shareholder of Tata group companies, is contrary to the resolution passed by Tata Trusts a year ago to retain the company as an unlisted entity.
The view over the last few years has been that Tata Sons should continue as it is, but its expansion and the new capital and technology intensive businesses do demand an urgent re-look, Vijay Singh, who was former Defence Secretary, told The Indian Express, pushing for the listing of the company.
The matter of listing Tata Sons has been under consideration and discussion for a while now as the Reserve Bank of India regulations require Tata Sons to be listed on the stock exchanges as it is considered to be an upper layer non-banking finance company.
Read | Tata Trusts CEO urged Srinivasan, Vijay Singh to step down at Noel Tata’s request
“Tata Sons, from its earliest days a 100 years ago, has been a key driver of nation building projects such as steel, locomotives, power and infrastructure. That role has now expanded into areas like aviation, defence, semiconductors, batteries and electronics which demand large capital that can be raised internally only up to a point,” Vijay Singh said, stating the time has come for listing of Tata Sons.
Sources said Tata Trusts Chairman Noel Tata is said to be keen to retain Tata Sons as an unlisted entity. His predecessor Ratan Tata was also against the listing of Tata Sons.
Srinivasan was earlier quoted as saying, “A public listing would not only unlock value for minority shareholders but also equip Tata Sons with capital to sustain growth.”
Story continues below this ad
Mails sent to Noel Tata, N Chandrasekaran and other trustees did not elicit a response.
“If India is to produce fighter aircraft with a foreign partner, a huge investment will be required. Such projects, crucial for the country, should never be foregone for lack of funds which can only be raised from the market by a listed entity,” Singh said. Singh was on the board of Tata Sons for 12 years till 2025.
He said Tata Sons needs more transparency in view of its size and scale of operations. “Tata Sons’ worth has quadrupled over the last decade and it certainly needs more transparency and regulatory oversight given the scale, value and employee strength of its businesses,” he said.
According to Singh, control, be it charitable trusts, was a workable proposition in earlier times but Tata Sons needs stability and a rigorous regulatory mechanism now. “The Tata Trusts have been fractious and turbulent in the recent past and there is no guarantee of a better future,” Singh said.
Story continues below this ad
When asked whether listing will reduce the influence and control of Tata Trusts, Singh said, “I do not think listing will significantly affect the trusts which will retain their large shareholding, board seats etc and will not lose their promoter status.”
There is also a fear that another business group will gain an entry into Tata Sons and try for a takeover once the company is listed on the exchanges. This is because anybody can buy Tata Sons shares from the stock market and increase the shareholding through secondary market purchases. “A takeover bid is unlikely given the large size of the trusts stake,” Singh said.
Tata Trusts owns 66 per cent stake in Tata Sons and its Chairman is selected with the approval of Tata Trusts.
He said the articles of Tata Sons will have to be reworked to obviate the value distortions and conflict of interest. “The articles will also need to specify that the main purpose of Tata Sons is to take the country forward through pathbreaking and cutting-edge ventures, for which it must be a listed entity,” Singh said.
Story continues below this ad
“Tata Sons Chairman N Chandrasekaran sees it (listing of Tata Sons) as essential but can’t say so because Tata Sons official position has been to remain private. I think some trustees will not oppose an RBI decision on listing and nor will Venu. I don’t think Noel will be able to get a unanimous resolution against listing,” said a senior director in the Tata Group who preferred anonymity.
