Shares of several Tata Group companies declined on September 18 after Tata Trusts opposed the proposed listing of Tata Sons, reversing part of the gains recorded in the previous session.
Tata Chemicals was among the biggest losers, falling as much as 7.6%, while Tata Investment Corporation declined 3.1%. Tata Motors Passenger Vehicles slipped 2% and Tata Power dropped 1.6%.
The stocks had gained a day earlier after Tata Sons reappointed N Chandrasekaran as chairman and indicated that a possible public listing of the holding company would be considered. The Shapoorji Pallonji Group, a minority shareholder in Tata Sons, has also proposed selling a portion of its stake.
Tata Trusts raises objections over listing
Tata Trusts reiterated that it has not approved a public listing of Tata Sons and said the group’s long-standing ownership structure should be preserved.
In a statement issued on September 17, Tata Trusts said the Tata Sons board had discussed the Reserve Bank of India’s (RBI) communication and decided that all available options, rather than only a listing, should be examined.
"The Board agreed that all available options, and not listing alone, should be thoroughly explored and assessed on an immediate basis, with the findings and recommendations presented to the Board," Tata Trusts said.
Noel Tata, chairman of Tata Trusts, also said the RBI order did not specifically direct Tata Sons to list its shares.
"The RBI's order 'does not mention listing'," Noel Tata said, adding that the communication did not prescribe any particular action or state that Tata Sons was in violation of regulations.
Noel has reportedly termed the reappointment vote for Chandrasekaran as 'illegal'. It was ealier excpected that Chandrasekaran's reappointment would result in the listing of Tata Sons but Noel's comments and Tata Trusts' latest statement has induced uncertainty among investors.
Leadership differences come into focus
Noel Tata said the board needed detailed information and legal clarity before taking any decision.
"What its legal effect is, and what it requires of this Company and by when, are questions upon which this Board has formed no view," he said.
The disagreement highlights differences between Chandrasekaran and Tata Trusts, which owns about 66% of Tata Sons. The issues under discussion include the possible listing of Tata Sons, Air India’s financial challenges and the planned exit of a minority shareholder.
