Proxy advisory firm InGovern feels a listed Tata Sons would be better placed to support the Group’s most capital-intensive bets, from semiconductors to aviation, arguing that the holding company’s growing ambitions now call for a more flexible and transparent capital structure.
InGovern in its report, observed that Tata Group companies continue to invest in strategic projects involving semiconductors, defence, global supply chains, aviation and data centres.
The projects that may require capital support include Tata Electronics’ iPhone supply-chain operations, semiconductor plants in Assam and Gujarat, Air India and Air India Express, Tata Advanced Systems and defence-related initiatives, and data centres, digital infrastructure and advanced manufacturing.
Greater flexibility
As per InGovern, a listing will enable funding commitments of this scale without Tata Sons having to rely solely on internal resources. A listing, it said, will give the company greater flexibility to raise debt and equity, use listed shares for acquisitions and joint ventures, and fund new initiatives without relying solely on internal accruals.
The proxy adviser tied the argument to the Group’s recent record of drawing global partners. “During N Chandrasekaran’s tenure, Apple deepened its manufacturing engagement through Tata Electronics, Nvidia partnered with TCS on artificial intelligence, Boeing and Airbus expanded aerospace engagement with Tata companies, Singapore Airlines became a shareholder in Air India, and Starbucks expanded its Indian venture,” said InGovern.
“These developments demonstrate the Group’s scale and ambition,” it said, adding that they also make a flexible and transparent capital structure increasingly important.
The report comes after RBI reportedly rejected Tata Sons’ bid to surrender its registration as a core investment company, a route the holding company had pursued after strengthening its balance sheet and repaying over ₹21,000 crore of debt.
With that option shut, InGovern said, the compliance and listing obligations applicable to upper-layer NBFCs are back at the centre of the group’s agenda.
Orderly listing
InGovern urged the Tata Sons board, meeting on Thursday, to begin preparing for an orderly listing rather than prolonging the uncertainty.
A public Tata Sons, it argued, would be better equipped to allocate capital between established businesses and newer ventures and to fund national-scale projects without straining its balance sheet.
“A listing would improve transparency, provide liquidity to non-Trust shareholders, strengthen accountability, improve access to capital, clarify the relationship between Tata Sons and the Tata Trusts and provide greater confidence to employees, investors, lenders and strategic partners,” it said.