00:00Tata bought battle after weeks of back and forth. Now Tata Trust has proposed a different route
00:05for Tata Sons, one that could keep its holding company private while changing the way it is
00:12structured. The Tata Trust, which holds a 66% stake in Tata Sons, has proposed a straightforward
00:18plan, merged two Tata Group operating companies, Tata Electronic System Solutions and Tata
00:24Consulting Engineers into Tata Sons. The Trust says that this would give Tata Sons its own operating
00:31businesses and revenues and help it move out of the regulatory classification of an NBFC, which is
00:37a non-banking financial company. The proposal also aims to ensure Tata Sons no longer qualifies as a
00:43core investment company, a classification mainly linked to companies that hold investments in
00:48other group companies. If the restructuring goes through, Tata Sons would remain an unlisted
00:54private company. So let's understand this entire controversy better. So Tata Sons is facing a
01:01listing dilemma after the RBI classified it as an upper layer NBFC and under RBI rules, large NBFCs
01:09in this category are required to list their shares on the stock market. Now that puts Tata Sons in a
01:15difficult spot as the company has traditionally remained privately held and with the RBI now
01:20rejecting Tata Sons request to surrender its financial registration, the listing requirement
01:25remains in focus and now Tata Trust is exploring a restructuring plan aimed at changing Tata Sons
01:31business profile and potentially keeping it unlisted. Now let's understand about what is the plan.
01:37So Tata Sons has a strong reason to remain a private unlisted company. Tata Trust owns about 66%
01:43of Tata Sons and has favoured keeping the group's holding company under private ownership and
01:49control. Going public would bring greater disclosure scrutiny from public shareholders and increase
01:55regulatory and market attention and Tata Sons had also sought to surrender its NBFC registration
02:00which would have removed the RBI's listing requirement. But the RBI rejected that request,
02:06putting the pressure back on Tata Sons to either comply with the listing rules or restructure its
02:11business. Now so how can Tata Sons avoid a public listing? Let's understand. The proposed route is
02:18to change the very nature of the company from primarily holding investments in Tata Group firms
02:23to having substantial operating businesses of its own. For this, Tata Trust has proposed merging two
02:28major operating companies, Tata Electronic System Solution and Tata Consulting Engineers into Tata Sons.
02:35The idea is that a changed business profile could take Tata Sons outside the RBI framework
02:40that triggers mandatory listing. In short, change the business structure, change the regulatory status
02:45and potentially keep Tata Sons private.
