Day after Tata Trusts proposed a plan for the reorganisation of Tata Sons, chairman Noel Tata said the public listing of the company would fundamentally change the Tata Group's long-term investment and social-development model. The Trusts chairman reasoned a listed Tata Sons could face greater pressure to deliver quarterly results to satisfy shareholders, which "could impact" the group's philanthropic efforts.
The Tata Trusts chairman on Tuesday said the proposed reorganisation of Tata Sons complies with Reserve Bank of India guidelines. He expressed hopes that the RBI will engage with the group and help find a solution to avoid stock market listing of Tata Sons.
The remarks came amid an ongoing feud over the public listing of the conglomerate Tata Sons, 66 per cent of which is owned by Tata Trusts. The charity on Monday proposed merging two Tata Group companies with the holding company in its bid to prevent the listing of shares.
Speaking at the Republic Summit, Noel Tata explained the relationship between Tata Sons and Tata Trusts. He said the Trusts have a dual role — as a philanthropic organisation and as the group's controlling shareholder — but the two functions are linked through Tata Sons. “So the roles are separate. Tata Sons is the engine that continues to increase the value of the corpus of our trusts,” Noel Tata said.
He said the corpus of the Trusts has expanded by about 20 per cent annually over the past 30-35 years. Dividends received from Tata Group companies provide the Trusts with the income required to fund their philanthropic activities.
{{/usCountry}}He said the corpus of the Trusts has expanded by about 20 per cent annually over the past 30-35 years. Dividends received from Tata Group companies provide the Trusts with the income required to fund their philanthropic activities.
{{/usCountry}}“And their role is really to keep making sure that our income stays ahead of inflation, so that our spending power keeps going up year by year by year, and we do that through the companies, through the dividends that finally end up coming to the Trusts, and which gives us the power to spend from the Trust,” news agency ANI quoted him as saying.
According to Noel Tata, the Trusts' philanthropic work is focused primarily on healthcare and education, along with some initiatives in skill development.
What is Tata vs Tata about
His comments come amid ongoing discussions over Tata Sons' future structure, leadership and the possibility of a public listing. The debate follows a rare public disagreement between Tata Trusts and Tata Sons, with the charity opposing the reappointment of Tata Sons Chairman N Chandrasekaran and a proposed listing of the holding company, which oversees more than 30 Tata Group companies.
Noel Tata said a listing would change the way Tata Sons has operated for more than 150 years. Going public would bring greater market scrutiny, disclosure requirements and oversight from minority shareholders, potentially affecting the influence Tata Trusts has traditionally had over the group's strategy.
(With inputs from ANI, Reuters)