Noel Tata has proposed restructuring Tata Sons and buying out part of SP Group's stake for ₹25,000 crore, seeking to address ownership and listing concerns.
Noel Tata has urged the Tata Sons board to consider a restructuring plan and a ₹25,000 crore buyout of SP Group's stake, aiming to resolve key ownership and listing concerns.
Noel Tata, chairman of Tata Trusts, has asked the Tata Sons board to discuss and vote on a proposed restructuring plan that could help the company avoid a public listing while arranging liquidity of ₹25,000 crore for the Shapoorji Pallonji (SP) Group.
In letters addressed to Suprakash Mukhopadhyay, company secretary of Tata Sons, Noel requested that the proposals be included in the agenda of the board meeting scheduled for November 26.
The latest move follows a meeting between Noel Tata and Tata Sons chairman Natarajan Chandrasekaran on Sunday. The discussion was aimed at resolving differences within the group's leadership, but the meeting appears to have failed to break the deadlock.
The disagreement has partly centred on Chandrasekaran's proposed full five-year term. Noel had opposed the extension, but his position was overruled by the Tata Sons board at its September 17 meeting.
In his communication, Noel referred to the Reserve Bank of India's (RBI) decision rejecting Tata Sons' application to surrender its core investment company (CIC) status. The central bank also directed the company towards a public listing.
He also cited a September 28 communication from Tata Trusts, which collectively holds approximately 66% of Tata Sons, asking the company and its directors to examine a strategic restructuring proposal.
The earlier proposal suggested merging Tata Electronics Systems Solutions Private Limited and Tata Consulting Engineers with Tata Sons Private Limited.
According to Noel and Tata Trusts, the restructuring would restore Tata Sons to an earlier operating structure. Under this model, the company would generate revenue through its own business activities while continuing to function as the holding company for the wider Tata Group.
The proposal also seeks to align Tata Sons with its earlier classification by the RBI, following 2004, as a non-banking, non-financial company.
However, the plan has not received unanimous support. Tata Sons vice-chairman Venu Srinivasan, who is also associated with the Sir Dorabji Tata Trust and Sir Ratan Tata Trust, has called for a more detailed examination of the proposal.
The second major proposal focuses on providing liquidity to the financially stressed SP Group, which owns approximately 18% of Tata Sons.
At the September 17 board meeting, Noel had suggested a selective capital reduction mechanism that could generate ₹25,000 crore for the SP Group. In his latest letter, he has requested a formal discussion and vote on the proposal.
Under the proposed arrangement, Tata Sons would purchase and cancel a portion of the SP Group's shares. The number of shares cancelled would be calculated to provide the group with ₹25,000 crore.
The proposed buyout would take place in two stages over a period of 18 months. The arrangement is intended to provide financial relief to the SP Group while potentially changing the shareholding structure of Tata Sons.
Whether the proposal will receive board approval remains uncertain.
The November 26 board meeting could become a significant moment in determining the future direction of Tata Sons.
The board will need to decide whether Noel's proposals should be formally considered and put to a vote. The discussions could influence the company's ownership structure, regulatory position and relationship with the SP Group.
The outcome may also have implications for the broader Tata Group, given Tata Sons' role as its principal holding company.
For now, the inclusion of the restructuring and buyout proposals on the meeting agenda remains an important point to watch.
Separately, shares of Trent Limited ended higher on Friday after the company reported a 25% increase in profit. On the BSE, Trent shares gained 5.20% to close at ₹3,015.10. On the NSE, the stock advanced 5.43%, settling at ₹3,017.30.
The stock market movement followed the company's latest earnings announcement, reflecting a positive investor response to its profit growth.
Conclusion
Noel Tata's proposals bring the debate over Tata Sons' ownership structure, regulatory status and leadership differences into sharper focus. The suggested ₹25,000 crore SP Group buyout could provide liquidity to a significant shareholder while the restructuring plan seeks an alternative to public listing. However, both proposals require careful consideration and board-level support. The November 26 meeting will therefore be important in determining whether the Tata Group can move towards a resolution of its ongoing differences.