The latest proposal released by the Tata Trusts on Monday evening, involves the merger of Tata Electronics and Tata Consulting Engineers with Tata Sons.
As per the earlier organization structure, Tata Sons remained a Core Investment Company and sought deregistration from the Reserve Bank of India after repaying a significant part of its debt. However, Tata Trusts now wants Tata Sons to cease being an NBFC as well as a CIC, by changing its operating and asset profile.
Since Tata Electronics and Tata Consulting Engineers are 100% subsidiaries of Tata Sons, their merger will not require Tata Sons to issue shares to an outsider. According to the Trust, they are also open to adding more operating businesses to Tata Sons.The Tata Trusts, in their proposal, mentioned that the proposed reorganization is in the best interests of both the Tata Group, and its stakeholders.
In an interaction with CNBC-TV18, Hetal Dalal of IiAS said that the move that the Tata Trusts has made will now depend on the RBI on whether it succeeds or not. For the proposal to go through, the Trust members will also have to be on the same page.
Dalal went on to add that it remains to be seen whether Venu Srinivasan, who is a member of the Tata Sons board, will agree to the proposal. Srinivasan has been in favour of the Tata Sons listing.
Shares of Tata Chemicals are trading 3.2% lower on Tuesday at ₹620.6. The stock is down 17% so far this year.
Shares of Tata Investment Corporation are trading 2.3% lower on Tuesday at ₹629.85. The stock is down 10% so far this year.
Shares of Tata Motors Passenger Vehicles are down 2.9% on Tuesday at ₹273.3. The stock is also trading at a 52-week low.