Tata Sons IPO: Decision to go against Ratan Tata, Noel Tata’s views! Will Tata Sons enter the stock market even without desire?
- Controversy over the listing of Tata Sons on the stock market is intense
- Position of Tata Sons regarding listing
- The company needs stability and strict rules
Tata Sons IPO: The ongoing controversy over the listing of Tata Sons on the stock market has intensified once again. Following Venu Srinivasan, Vijay Singh has also backed the company for listing through IPO. According to him, it is important for the company to take this step over time for capital and transparency. Vijay Singh, a senior trustee of Tata Trusts, said earlier the idea was to keep Tata Sons unlisted. But the group’s rapid expansion and increasing investment in new technology capital-intensive businesses will make it important to rethink this decision.
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However, a year ago, Tata Trusts had passed a resolution not to keep Tata Sons unlisted. This new view of the existing trust appears to be different from the earlier decision. Therefore, the internal discussion has become more intense. Moreover, RBI regulations also make this discussion important. According to the RBI, Tata Sons is classified as an ‘upper layer NBFC’ and therefore, the company is required to be listed on the stock exchange. Due to this, the discussion regarding the listing of the company has been going on for a long time.
Position of Tata Sons regarding listing
Tata Sons has played a significant role in the development of the country over the past 100 years. After contributing to sectors like steel, railway engines, power and infrastructure, the company is now rapidly expanding into new sectors like aviation, defence, semiconductors, batteries and electronics. Vijay Singh says these areas require huge investment, which is difficult to meet from internal resources alone, so now is the time for Tata Sons’ listing.
According to a report in the Indian Express, sources have said that Tata Trusts chairman Noel Tata wants to keep Tata Sons unlisted for now. Earlier, Ratan Tata was also against listing the company, as he felt it could jeopardize the group’s independence and long-term vision.
Easy availability of funds for business growth
Venu Srinivasan believes that if Tata Sons is listed on the stock market, small shareholders will benefit and their stake will increase in value. Moreover, it will be easier for the company to get necessary funds for growth and development. Noel Tata, Chairman of Tata Sons N. Emails sent to Chandrasekaran and other trustees went unanswered.
Meanwhile, Vijay Singh said that if India decides to develop fighter jets with a foreign partner, it will require huge investment. Mere lack of funds should not stop such important projects and it is imperative to raise funds from the market, which is possible only through a listed company.
The company needs stability and strict rules
According to Vijay Singh, who will remain on the board of Tata Sons for 12 years till 2025, given the company’s growing turnover, more transparency is needed. He explained that the value of Tata Sons has quadrupled in the last 10 years, hence the need for stricter regulation on the company’s operations, value and headcount. He added that previously it was fine to have control through charitable trusts, but now the company needs stability and more stringent regulations. The Tata Trusts have seen dissension and instability in recent years, so there is no guarantee that the situation will improve in the future.
Vijay Singh says that if Tata Sons does list, it will not significantly affect the control of Tata Trusts. He further explained that the trusts will retain majority stake, their presence on the board of directors and their promoter status will also remain intact. Some also fear that after the listing, another business group may enter Tata Sons by buying shares and try to take over the company by gradually increasing its stake.
However, according to Vijay Singh, this is unlikely to happen, as the Tata Trusts hold a significant 66% stake, making any acquisition difficult. He also pointed out that Tata Trusts holds 66% stake and N. Chandrasekaran has also been appointed with the approval of the Trusts. This means, trusts continue to play an important role in important company decisions.
It is not easy to get everyone’s consent
According to Vijay Singh, the company’s bylaws will need to be amended before the listing to avoid value disputes and conflicts of interest. He added that these rules should also clearly state that Tata Sons aims to promote new and modern businesses for the development of the country. According to reports, sources say that some trustees will not oppose the RBI’s decision and it will not be easy for Noel Tata to get everyone’s consent against the listing.
Will Tata Sons have to list on the stock market or will they get an exemption? The decision will be important for investors, as it could affect the shares of several companies of the Tata group.
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