Tata Trusts Direct Tata Sons to Initiate Exit for SP Group: Report
The Tata Group’s long-standing dispute with the Shapoorji Pallonji (SP) Group may soon come to an end, as Tata Trusts has reportedly directed Tata Sons to initiate a negotiation with the minority stakeholder to provide them with an exit. According to a recent report, Tata Trusts has asked Tata Sons Chairman N Chandrasekaran to “exercise best endeavours” to ensure that the company remains an unlisted private entity, thereby avoiding the Reserve Bank of India’s (RBI) listing requirements.
The development comes as Tata Sons faces a September 30 deadline set by the RBI to list itself. The central bank had earlier asked the Tata Group to list its holding company, Tata Sons, within a year to increase transparency and improve corporate governance.
The SP Group, which owns around 18.4% stake in Tata Sons, has been seeking an exit from the company for several years. The group’s patriarch, Pallonji Shapoor, had earlier expressed his desire to sell his stake in Tata Sons, citing the company’s reluctance to list itself and the lack of transparency in its operations.
The Tata Trusts’ decision to initiate a negotiation with the SP Group is seen as a significant development in the ongoing dispute between the two parties. The trusts, which hold around 66% stake in Tata Sons, have been at loggerheads with the SP Group over the latter’s repeated requests for an exit.
According to the report, Tata Trusts has asked Tata Sons to negotiate with the SP Group to find a mutually acceptable solution. This could involve the SP Group selling its stake in Tata Sons to a third party or allowing the trusts to buy out their stake.
The Tata Group’s reluctance to list itself has been a major bone of contention between the two parties. Tata Sons had earlier cited concerns over the impact of listing on its family-dominated corporate structure and the potential dilution of its control over the company.
However, the RBI’s directive to list Tata Sons has put pressure on the company to find a solution to the impasse. The central bank’s move is seen as an effort to increase transparency and improve corporate governance in the country’s largest business conglomerates.
The Tata Group’s decision to initiate a negotiation with the SP Group is likely to have far-reaching implications for the company’s future plans. If the two parties are able to reach a mutually acceptable solution, it could pave the way for Tata Sons to list itself and comply with the RBI’s directive.
On the other hand, if the talks fail, it could lead to further tension between the two parties, potentially affecting the Tata Group’s corporate structure and the SP Group’s stake in the company.
In recent years, the Tata Group has been facing several challenges, including the departure of its erstwhile chairman, Cyrus Mistry, and the subsequent family feud over the company’s leadership. The ongoing dispute with the SP Group has only added to the company’s woes.
In conclusion, the Tata Trusts’ decision to initiate a negotiation with the SP Group to provide them with an exit is a significant development in the ongoing dispute between the two parties. The talks are likely to be complex and challenging, but if successful, could pave the way for Tata Sons to list itself and comply with the RBI’s directive.
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