Tata Sons – Noshir Soonawala makes a strong case for not listing

In the ongoing debate on whether or not Tata Sons should be listed, a new perspective has come from Noshir Soonawala, a long time Tata group veteran of over 6 decades. He believes that Tata Sons should remain an unlisted entity.

A recap of the Tata Sons listing debate

Over the last couple of years, there has been an ongoing debate on whether Tata Sons should be listed. Under the new NBFC scale-based regulations, large NBFCs beyond a certain asset size had to be listed by September 2025. However, that deadline was missed as Tata Sons sought permission to remain an unlisted company by repaying all its debt. In the recent past, the scale-based regulations announced by RBI has been making it increasingly difficult for Tata Sons to remain an unlisted entity. The views, even within the Tata Group, are slowly gravitating towards Tata Sons getting listed.

Tata group insiders are veering towards Tata Sons listing

In the last few years, there has been a rising crescendo of calls to list Tata Sons. The first big call came from the SP group. However, that was more because the group holds an 18.4% stake in Tata Sons and has been handicapped by its inability to monetize its Tata Sons shares to reduce its debt. Interestingly, in recent months, most of the independent directors of the group including the likes of Venu Srinivasan and even Chandra are getting more inclined to list Tata Sons. The general belief is that, considering its size, Tata Sons would find it really tough to justify remaining an unlisted company. More so, considering the fact that Tata group follows high standards of governance and transparency.

Noshir Soonawala has a counterpoint

In fact, Tata group veteran Noshir Soonawala has two very strong counterpoints to a Tata Sons listing. His first counter is that Tata Sons has long been a company that has channelled funds from the Tata group for charity purposes. However, he believes that once Tata Sons lists, it would be answerable to large investors and institutions. In that case, the primary driver would be profit-distribution, rather than charity work. The second argument is more cogent. Tata Sons has been acting as an incubator for some of the difficult businesses with a long gestation. A listed Tata Sons would mean, too much cash flow pressure. In the process, Tatas may have to forsake long term strategic goals.

Will the RBI factor in the Soonawala perspective?

The Tata Sons listing story is not just an NBFC story, but a larger corporate culture story. In such cases, the final decision may rest more with the government than with the RBI. The government would obviously be conscious about the impact of uncertainty in a large conglomerate like the Tatas. The points made by Soonawala are valid and the Tata group has given ample evidence of its commitment to charity and incubation in the past. While the technical case was tilted in favour of Tata Sons listing, the recent arguments by a veteran like Soonawala is likely to carry a lot of weight. In a sense, Soonawala may have just tilted the story in favour of Tata Sons remaining an unlisted entity!