Tata Group is the largest business house in India. If we talk about its valuation, it will probably be one of the largest business houses in the world. In such a situation, the central bank of the country, RBI, has also accepted a major plan of the Tata Group. Had this not happened, its impact would have been seen not only on the economy of the entire country and the stock market, but also in Asia and globally. Let us understand this whole story…
Tata Group’s business is spread across the globe. All this business is run by its holding company Tata Sons. The Reserve Bank of India granted Tata Sons the status of a non-banking financial company-ul (NBFC-UL) in 2022. While before that, in October 2021, a directive came from the RBI that all NBFC-ULs in the country must be listed on the stock market by September 2025. Here the difficulty arose.
Valuation of Rs 33,49,600 crore.
Currently, only 26 companies of the Tata Group are listed on the stock exchange. Apart from this, there are many other companies that are directly owned by the Tata Sons holding company. The valuation of Tata Sons is $400 billion (around Rs. 33,49,600 crores). In such a situation, Tata Group anticipated that listing Tata Sons on the stock market would create chaos in the stock market and also affect the economy of the country.
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If a company with such a huge valuation was listed on the stock market, its impact would be visible both in the Indian stock market and in Asia. Therefore, Tata Group was trying to make such efforts that the RBI guidelines could be avoided and Tata Sons would not have to be listed. Tata Group had converted Tata Sons from a public limited company to a public limited company in 2017.
Tata put this plan before RBI
Tata Group had sought RBI’s exemption for not listing Tata Sons. For this, it submitted a plan. Tata Sons has already started implementing some parts of that plan. The most important thing about this is that Tata Sons’ NBFC-UL status will now end. Tata Sons will again restructure its balance sheet and become a debt-free company as per RBI norms.
As on September 30, 2023, Tata Sons had a net debt of approximately Rs 15,200 crore. While the company alone has a cash reserve of approximately Rs 2,500 crore. Not only this, whatever investment Tata Sons makes in the future, it will do so from the dividends and cash reserves it will receive.
He also received advice from Ratan Tata.
According to ET News, Tata Sons had also consulted Ratan Tata before approaching the RBI for exemption from listing. Ratan Tata is the Chairman Emeritus of Tata Sons. Tata Trusts holds a 66 per cent stake in Tata Sons. This trust has been started by the people of the Tata family. Tata Trusts includes many other trusts of the Tata family, of which Sir Dorabji Tata Trust and Sir Ratan Tatar Trust are the largest.
