Tata Sons has infused Rs 1,100 crore into Tata Electronics Private Limited through a rights issue, according to regulatory filings reviewed by NDTV Profit, as the Tata group weighs a restructuring proposal aimed at helping Tata Sons avoid a mandatory stock market listing.
Tata Electronics allotted 17.74 crore equity shares to Tata Sons on September 18 at an issue price of Rs 62 apiece, comprising a face value of Rs 10 and a premium of Rs 52. Tata Sons was the sole subscriber to the issue, the company's return of allotment filed with the Registrar of Companies shows.
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The latest infusion follows an investment of Rs 1,500 crore by Tata Sons in March, taking its investments in the company across the two tranches to Rs 2,600 crore.
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The capital infusion comes against the backdrop of a proposal by Tata Trusts, dated September 28, to merge Tata Electronics Systems Solutions (TESS) and Tata Consulting Engineers (TCE) into Tata Sons. The proposed restructuring seeks to alter Tata Sons' business and asset composition so that it no longer falls within the Reserve Bank of India's regulatory framework for non-banking financial companies and core investment companies.
The RBI had classified Tata Sons as an upper-layer NBFC in September 2022. The classification brought it within a regulatory framework that requires upper-layer NBFCs to be listed within three years of identification. Tata Sons has remained unlisted, and the proposed restructuring is intended to address the regulatory trigger for a listing.
The proposal has also been taken up by Tata Sons Chairman Noel Tata. In two letters dated October 29, he invoked Article 121B of the company's articles of association and sought the inclusion of draft resolutions relating to the restructuring proposal on the agenda for the November 26 board meeting.
The letters seek to place the proposal before the board for consideration and a vote. They do not constitute board approval of the restructuring.
The proposed merger would involve TESS and TCE, both wholly owned subsidiaries, being merged into Tata Sons. The plan would require the relevant corporate and regulatory approvals, including the RBI's no-objection.
The rights issue and the restructuring proposal are separate corporate actions, but together form part of a wider set of developments around Tata Sons' capital structure and its regulatory status.
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