Patriarch Says Listing May Limit Tata Sons’ Role as Backstop

Founding-family patriarch Noel Tata said a public listing could constrain Tata Sons Pvt.’s ability to support group firms in trouble, making his case in a rare public interview nearly two weeks after a boardroom fight erupted at one of India’s largest conglomerates.

Tata Sons has been a backstop whenever a group entity has gotten into trouble, and banks, lending agencies, shareholders and suppliers have “always taken comfort from the fact,” Noel, head of the charities that own 66% of Tata Sons, told India’s Republic TV.

“Now the worry is when you have individual shareholders, would they agree to it and would they be willing to allow us to invest” in firms going through a difficult patch, he said. “These are things which we believe will change the fundamental fabric of the way this group has run over the last 150 years.”

Noel was outvoted by the Tata Sons board in a stormy meeting on Sept. 17 to pursue listing and reappoint Natarajan Chandrasekaran as chairman for another five years, stoking a battle for control at the group that makes everything from processed salt to SUVs.

Read more: Inside the 24 Hours That Laid Bare Tata’s Brutal Power Struggle

On Monday, Tata Trusts proposed that the holding company of the storied conglomerate merge with two of its unlisted units — Tata Electronics Systems Solutions Pvt. and Tata Consulting Engineers — to stave off a listing order.

The proposed solution would restore Tata Sons back to a structure with “operating and financial” businesses in the same firm, Noel said. “This is something that is very common in other holding companies in India which operate on both these parameters.”

It still needs the approval of Tata Sons board and India’s central bank.

The Trusts would like Tata Sons to “review and, if necessary, modify,” the proposal, and engage with the Reserve Bank of India as “we believe that this is a solution which would enable us to avoid listing,” Noel said.

A listing would also change the philanthropic mandate of Tata Sons, he said. “I hope the RBI will engage with us on this subject and we should be able to find some common ground.”