Tata Sons likely to remain unlisted
The Reserve Bank is not averse to allowing Tata Sons Pvt Ltd, the holding company of the $165 billion salt-to-software conglomerate, to remain a private entity provided the decision is unanimous by both the shareholder groups, as the company has already met almost all the regulatory conditions to be an unlisted company, according to two sources. The regulatory deadline for large non-banks to go public is September 30.
If formally granted exemption, it will make the Tatas more comfortable but leaves the debt-laden Mistry family that owns 18.6% of Tata Sons, making it the largest shareholder after the Tata Trusts which owns 66.8%, piqued as they were keen to exit the conglomerate through a public share sale.
Tata Sons had in August 2024 surrendered its NBFC licence after paying back all its debt and turned a cash-positive company by March 2024—the most important criterion to be private company under the RBI norms for large non-banks.
Despite this, in the latest list of upper-layer NBFCs released on January 16, 2025 under the scale-based regulation for NBFCs, Tata Sons finds a mention at the fourth slot as a core investment company, in the list along with 14 others--LIC Housing Finance, Bajaj Finance company, Shriram Finance, Cholamandalam Investment & Finance, L&T Finance, Mahindra Financial Services, Aditya Birla Finance, Tata Capital which is set to hit the markets in the third week of the month with the largest ever segmental IPO of close to Rs 18,000 crore, Piramal Capital & Housing Finance, PNB Housing, HDB Financial which also met RBI mandate in June with a Rs 12,500-crore IPO, Sammaan Capital (formerly Indiabulls Housing, Muthoot Finance, and Bajaj Housing that also went public last year with a highly successful IPO raising Rs 6,560 crore in September 2024.
On retaining Tata Sons in the upper layer NBFC list under the scale-based regulatory framework for NBFCs issued on October 22, 2021, the RBI said “it is without prejudice to the outcome of its application for de-registration, which is under examination.”
Tata Sons had formally applied to cancel its NBFC registration in August 2024. According to the scale-based regulatory framework, RBI has classified large non-banking companies NBFC-BL or base layer, middle layer (ML), upper layer (UL) and top layer (TL) based on their asset size. The new framework demands all upper layer NBFCs to be publicly listed before September 30, 2025.
“Tata Sons has complied with all the stipulations put forth by the central bank to hold Tata Sons as an unlisted company, including squaring off debt and surrendering the NBFC licence,” one of the sources told TNIE Monday.
The second source said the RBI has however, wants the two major shareholders of Tata Sons—Tata Trusts and the Mistrys, to take a unified decision in the matter of not-listing.
“Currently, it looks like a divided house with the SP group favouring listing the holding company. So RBI wants a unanimous decision by both the shareholder groups,” the second source said.
Sources had told this paper earlier that the AGM of Tats Sons held on August 14, had unanimously decided to remain a private entity. A formal communication from the RBI is expected after its shareholders formally communicate their final decision to the regulator on whether they would like to retain Tata Sons as an unlisted entity, the second source added.
Before surrendering its upper layer non-banking financial company licence to the RBI in August 2024 to avoid mandatory listing, it had repaid over Rs 20,300 crore in debt between March 2023 and March 2024, leaving only a small amount of non-convertible debentures and preference shares, and thus meeting one of the main conditions to remain a private, closely-held company, which provides it with greater strategic flexibility and control over its operations.
Some stakeholders, including the Shapoorji Pallonji group and some members of Parliament had expressed concerns about the interconnectedness of Tata Sons with listed group companies and the potential impact on public shareholders if the mandatory listing is bypassed. As of March 2024, Tata Sons was net debt-free with a net cash balance of Rs 2,670 crore, down from a net debt of Rs 20,642 crore. The debt reduction was fueled by strong performance in FY24, which saw a 57% surge in net profit to Rs 34,654 crore in FY24and robust dividends from its subsidiary companies, particularly the cash-cow TCS, which also chipped in with Rs 19,000 crore.
But its net income came down by 24.3% to Rs 26,232 crore in FY25, mainly while revenue declined 12% to Rs 38,835 crore primarily due to a sharp drop in non-operating income, particularly from gains on TCS share buybacks and sales of investments in FY24.
Core operations, however, showed strong performance, with revenue from core operations comprising dividends, interest, and brand royalty fees, grew by 62% in FY25 to Rs 38,834.58 crore, down from Rs 43,893 crore in FY24, mainly due to the absence of large profit from investment sales. Other income, which mainly consists of gains from TCS share buybacks, plummeted 99% to Rs 125 crore in FY25 from a significant Rs 20,036 crore in FY24. Total revenue also included a profit of Rs 9,376 crore from selling investments.
But expenses also fell nearly 30% to Rs 1,946 crore helping it maintain higher cash and bank balances which rose 61% to Rs 1,866 crore in FY25 from Rs 1,154 crore in FY24.
Tata Sons, which has 323 subsidiaries as of March 2025, has invested Rs 21,591 crore in both new and existing businesses to help them grow and deleverage their balance sheets. Most of this amount, as much as about 95%, went into unlisted companies and only Rs 1,082 crore was invested in listed companies, mainly Tata Consumer Products.
Among unlisted and new companies, Tata Digital received the largest funding, with Rs 3,960 crore. Air India was close behind, with Rs 3,225 crore. Tata Electronics got Rs 3,000 crore, while Panatone Finvest, which owns Tejas Networks, received Rs 1,500 crore. Agratas was also funded with Rs 1,149 crore.
Older businesses also got funding with Tata Autocomp getting Rs 2,122 crore, Tata Capital (Rs 1,432 crore) before its IPO, Tata Projects got Rs 1,500 crore, and Tata International was given Rs 1,000 crore.
Tata Trusts comprises 12 trusts but primarily Sir Ratan Tata Trust and Sir Dorabji Tata Trust, and Shapoorji Pallonji group (SP Group, comprising Sterling Investments and Cyrus Investments) are the two major shareholders of Tata Sons, holding 66.4% and 18.6&, respectively. A few Tata Group companies and certain members of the Tata family hold the remaining shares of Tata Sons.
Ever since Tata Sons sacked the late Cyrus Mistry as the chairman o a board room coup in late October 2016, the Mistrys were looking for an exist through listing Tata Sons shares. The stake held by SP Group in Tata Sons is pledged with lenders. However, Tata Trusts, the majority owners of Tata Sons, are keen to retain the holding company as an unlisted entity.