Tata Sons' Listing Fate Hangs In Balance As RBI Deadline Expires — In This Economy
As the confusion around the future of Tata Sons' classification continues, one awaits at least a line of clarification from either the RBI or the Tata Group.
Happy Tuesday! It's monetary policy week again. This time around there is a 25-basis-point cut being priced in, bringing the benchmark repo rate down to 5.25%. Of the 37 economists polled, 11 expect a status quo, with the rest hoping for the central bank to bring down rates. While inflation is trending lower right now, it is expected to go above the 4% target by the end of the financial year. But alongside that, growth worries are also mounting. The question to ask though is this: with 100 basis points worth rate cuts already priced in, the government having cut GST rates on a whole host of products and additional savings from tax slab changes, how much more policy easing does India need? We'll watch what the monetary policy committee and the Reserve Bank of India finally announce on Wednesday.
On to this week's newsletter!
To List Or Not To List?
On Tuesday, the RBI's deadline for Tata Sons' listing officially ends. So far, apart from some source-based news reporting, there is no definitive answer on whether the regulator is going to insist on a public listing for the investment arm of India's most storied corporate house.
Tata Sons, in its annual report for FY25, noted that it had applied to surrender its certificate of registration as a core investment company. This classification as a core investment company is the primary reason why RBI considers Tata Sons as an upper layer NBFC. No certificate of registration, no public listing. Simple right?
The list of upper layer NBFCs is determined entirely at RBI's discretion. Though we have some idea of the methodology the regulator follows. According to details given by the RBI, it scores companies on various parameters such as size and leverage, inter-connectedness, complexity, nature and type of liabilities, group structure and segment penetration. On a scale of zero to 100, the higher the score, the greater probability that a company will be an upper layer NBFC.
Tata Sons is the principal investment holding company of the Tata Group companies. The Tata Group operates in every major sector, including technology, automotive, steel, consumer & retail, chemicals, infrastructure & energy, financial services, aerospace & defence, tourism, telecom & media and trading & investment.
The consolidated total borrowings of the company, as of March 2025, were at Rs 2.43 lakh crore, though it has a net cash positive status. On a consolidated basis, debt securities worth nearly Rs 93,000 crore are also on the balance sheet. Tata Group has 355 subsidiaries and 48 associates and joint venture. Tata Sons has some holdings in all of them. There is also cross-holding between Tata Sons and Tata Group companies, which further complicates the equity structure.
So as far as size, leverage, complexity, inter-connectedness and group structure are concerned, Tata Sons probably scores pretty high on the scale. It is also the only CIC in the list of the upper layer NBFCs. So no, it is not very simple for the RBI to give it an exemption.
There are also news reports that RBI is nudging Tata Group to resolve the issues it currently has with Shapoorji Pallonji Group, which owns 18.4% stake in Tata Sons. Currently Shapoorji Pallonji Group is looking for way to address the considerable private debt it has raised from the market. If Tata Group is able to buy at least part of SP Group's stake in Tata Sons, that should give adequate liquidity to the latter. However, these negotiations are becoming more complicated as talks continue.
To be sure, SP Group cannot sell Tata Sons stake in the open market, as the Tata Group's nod is required to conduct such a transaction.
As the confusion around the future of Tata Sons' classification continues, one awaits at least a line of clarification from either the RBI or the Tata Group.
Feature Five
Marcellus Investment Managers have seen their former CFO be arrested by the Mumbai police on embezzling more than Rs 1 crore.
BFSI firms line up more than Rs 60,000 crore worth paper in IPOs, Agnidev Bhattacharya reports.
The insurance industry has sought more leeway from the government on GST, Pallavi Nahata reports.
The tax department is reviewing Rajasthan High Court's unilateral judgement to extend the tax audit deadline, Shrimi Choudhary reports.
A stormy board committee meeting this month likely led to three independent directors quitting PTC India Financial Services.
Caught My Eye
Trump's latest salvo on films not produced in the US will likely have a deep impact on Indian movie lovers there. On his Truth Social profile, the US President announced that the country will levy a 100% tariff on all films not produced in the US. For Indian films, the American market contributes nearly 5-7% of total earnings. It is also one of the few true local connections for expats living there. Not only Indians, people from neighbouring nationalities who live in the US are also lovers of Indian films. Will this tariff tantrum ever end?
