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Tata Group Crisis: After the death of Ratan Tata, the Tata group is in trouble. Their troubles show no sign of abating. Now, former Vice President of Tata Sons N.A. Soonawala has expressed concern about the company’s proposed stock market listing. A warning has also been given recently in this regard. He explained that if Tata Sons gets listed on the stock market, the century-old structural framework of the group will be radically changed. The change will also affect the company’s traditional values ​​and its internal support systems, he noted. Let’s understand what exactly will be the result.

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Soonawala’s argument

In his column published in a newspaper, Soonawala argued that the impact of Tata Sons’ listing was not limited to compliance with regulatory norms; This also has a direct impact on the role played by Tata in the group. He wrote that Tata Sons is not just a ‘holding company’; Historically, however, she has played the role of both promoter and protector of the group’s core values. Soonawala raised the issue at a time when Tata Sons has formally applied for deregistration of itself as an ‘upper tier non-banking financial company’. But there is still some degree of uncertainty in this regard; Because as per the current norms mandated by the Reserve Bank of India, all NBFCs in the ‘Upper Layer’ category are required to be listed on the stock market.

Company’s application in custody of RBI

About a year and a half ago, Tata Sons submitted an application to the RBI, requesting cancellation of its registration as an Upper Layer NBFC. Sunawala has served Tata Sons for nearly 50 years and is considered the closest and most trusted associate of the group’s former chairman, the late Ratan Tata. Sunawala’s opinions are given special importance in every decision to Tata Sons.

RBI kept the company’s application pending

About a year and a half ago, Tata Sons had submitted an application to the RBI, seeking cancellation of its registration as an ‘upper layer’ NBFC. Sunawala has served Tata Sons for nearly 50 years and is considered the closest and most trusted associate of the group’s former chairman, the late Ratan Tata. In every decision to Tata Sons, Sunawala’s advice is given special importance.

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Sunawala started his career in 1968. He worked as Finance Director at Tata Sons for 11 years. Subsequently, in 2000, he was appointed as the Non-Executive Vice-Chairman of Tata Sons; He retired from this post in 2010. Even after this, he remained associated with ‘Sir Dorabji Tata Trust’ and ‘Sir Ratan Tata Trust’ till 2019. Then, at the age of 84, he retired completely. Even today, the practice of taking his advice very seriously within the Tata Group was particularly pronounced during Ratan Tata’s tenure.

Why opposition to listing in stock market?

In one of his columns, Sunawala argued that if Tata Sons were listed on the stock market, it would be accountable to institutional and foreign shareholders. The sole objective of these shareholders is to make profit only. Such investors will never be willing to invest capital to rescue or prop up other group companies in financial distress, as the Tata Group has done many times in the past. This inherent contradiction may lead to a fundamental change in the traditional role of the Tata Group and Tata Sons, as well as weaken the internal support system of the group.

Strict adherence to all regulations of RBI

Sunawala further stated that the Tata Group has always strictly followed the norms and standards laid down by the Reserve Bank of India (RBI). Whenever required, the Group has also made appropriate structural adjustments in line with these guidelines. He said that Tata Sons’ biggest demand for liquidity comes from the ‘Shapoorji Pallonji Group’; However, decisions with far-reaching implications like the listing of Tata Sons in the stock market cannot be taken on this basis alone. Tata Sons acts as the ‘holding company’ of the entire group, holding around 66 per cent stake in the group. After this, debt-ridden Shapoorji Palanji Group holds the second largest stake at 18.4 percent.

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