Tata Group stocks fell sharply during Friday’s trading session amid declining market value of the Tata group-listed companies to the tune of about $3.2 billion due to rising uncertainties regarding the governance and structure of Tata Sons.
As per Reuters estimates calculated using LSEG, the total market value of Tata group listed companies declined by about ₹30,222 crore ($3.16 billion) at 10:45 a.m. on September 18 compared with its closing position on Thursday.
The fall in stocks of the group-listed companies came against the backdrop of a pivotal meeting of the Tata Sons board which held on Thursday wherein the board decided to extend Mr. N. Chandrasekaran’s tenure as Chairman of Tata Sons by five years and also agreed to take the necessary steps towards fulfilling RBI requirements to enable public listing of Tata Sons.
This decision has only increased the gap between Tata Sons and the Tata Trusts, who own around 66% of the holding company. The Tata Trusts are opposed to the listing process, and have even questioned whether reappointment of Chandrasekaran could be considered a legal process. “The Trusts believe that all possibilities should be explored before moving forward towards a listing,” the Tata Trusts added.
The reaction in the market can be gauged through some of the Tata companies. While the Tata Consultancy Services fell by 2.69%, Tata Chemicals fell by 8.37%, while Tata Investment Corporation fell by 3.67%, according to Reuters. Losses have been recorded in Tata Motors Passenger Vehicles, but there were falls in Tata Power and Tata Motors.
This particular listing has more importance to Tata companies, which hold equity in Tata Sons. Some of the companies, which include Tata Chemicals, Tata Motors Passenger Vehicles, Tata Steel, Tata Power, Indian Hotels, Tata Consumer Products, and Tata Investment Corporation hold equity in the holding company.
On the other hand, the Shapoorji Pallonji Group, who holds around 18.4% equity in Tata Sons, is in favor of any listing. The group has further suggested monetisation of some of its equity, bringing yet another angle into the discussions regarding the ownership structure of Tata Sons.
These developments have thus made the focus of investors on the issues surrounding governance, compliance, and any listing plans of Tata Sons. Any discussion resulting from these discussions can have repercussions for the ownership structure of one of the biggest business conglomerates in India.
