Tata Sons May Resist RBI's IPO Push, Says IiAS's Dalal

Tata Sons May Resist RBI's IPO Push, Says IiAS's Dalal

Bloomberg

Wed, September 16, 2026 at 12:00 PM GMT+3

Hetal Dalal, COO and President of IiAS, a corporate governance and proxy advisory firm, says Tata Sons is expected to "put up a fight" against the RBI's efforts to require a listing. She argues that an IPO could constrain the group's operating flexibility.

00:00 Speaker A

Ital, thank you so much for joining us today. I do need to uh point out straight away that, you know, one of your shareholders is in fact Tata Group. So, with that in mind, can you just think ahead to this IPO, give us a sense of the scale, how much investor interest you're ex expecting as well, uh if it goes ahead.

00:30 Hetal

Well, I think um the Tata Group is one of the largest unlisted companies in India. The group itself is critical to the economy and therefore listing Tata Sons will make it a very, very large IPO. Uh and I think that's why it matters. Um it doesn't really impact the shareholders of the listed companies. Uh but if you look at a company which has been this large and has essentially grown to these levels, it's always held its uh performance to its close to his chest. So there's really not too much clarity on how the company has been performing over the years. And it's effectively a unique structure for the Indian market because at the end of at the the shareholders of Tata Sons are dominantly trust and the underlying philosophy is philanthropic. Um so listing of the Tata Sons will be unique and it'll be a very, very large IPO if it does list.

01:31 Speaker A

Now, I did use the word if when I said, uh if this listing goes ahead quite deliberately because, you know, Bloomberg's been reporting on sort of work arounds that are being explored by Tata to avoid mandatory listing. You know, for example, shrinking the balance sheet below the threshold required by the RBI. In your view, how likely is this outcome or is a listing inevitable?

02:08 Hetal

I think the Tata Group will put up a fight. Uh they have not wanted to be listed for a long time. Uh and that's been their consistent position. Uh they've also fought very hard to uh get out of the regulations that RBI forces them to list. But and this has been in the works for about 29, 30 months whether RBI will force them to list or not. Um well, the cards are up out now and you can see that RBI wants them to list, but I think the group is definitely going to put up some resistance to being listed. It is unlikely to simply cave in and say we're going to start the IPO process uh this year.

02:59 Speaker A

Yes, so you point out that they're not particularly enthusiastic about a listing, you know, one of the reasons they, you know, they've given reasons around uh compliance, uh disclosure as well. It sounds awful. I mean, what why is this a problem for them? This is what every listed company does.

03:22 Hetal

I think listing has to be a choice. Um the Tata Tata Sons has not wanted to be listed for several reasons. Um it's essentially it's the is the source of financial flexibility for the whole group, right? So, if you look at it when you have the listed companies, you know, get into trouble, it is Tata Sons with bails it out. Now, when if Tata Sons itself gets listed, uh I think it um it's its own decisions go back to public scrutiny. Um even in the unlisted space, Tata Sons has undertaken several decisions which have um which have been new, uh which have been uh ahead of what the market wants and not necessarily in line with um you know, an ROC or an IRR diktat. And I think that comes under scrutiny the minute it list, right? You'll have a set of public shareholders, you'll have shareholder scrutiny and everything that it does will then become open to uh question. And therefore while it might enhance Tata son's own financial flexibility in the sense of ability to raise capital, but it does limit its operation operating flexibility in terms of how and how quickly it can support group companies. So, I think that's the challenge that they're playing with.

04:49 Speaker A

Well, there's a very important board meeting tomorrow. Um you know, to start the process of choosing a successor to the Tata chair, Chandra. Um do you have any sense of who that person might be? And is this really the time for leadership changes at such an important juncture.

05:15 Hetal

I think um if you look at Chandra's tenure, he's uh he will at the end of his term complete 10 years. So it's reasonable to expect that there is a a refreshment. The challenge is that and and also the fact that Chandra will reach 65 years of age in about two years, which is the mandatory retirement age in the Tata group for all executive directors. So the fact that you know, his tenure was going to come to an end was inevitable and finding a successor was part of the plan. The question really is that have they found a successor or have they groomed a successor? Uh at this stage, there's lack of clarity. Tata Sons doesn't really communicate with market uh or with uh the set of stakeholders that it is critical to. And therefore whether a successor has been found, identified is unclear. The other piece is when you look at Tata from the structure also very unique because, you know, Tata trust own a dominant share of the equity. Uh the decision on who chairs the Tata Sans board will be driven by a selection committee uh which will predominantly comprise members of the trust uh and one representation of Tata Sons uh and an independent director. So therefore that decision is really what is going to be critical in terms of who takes over. Now, the trust have been embroiled in a battle and the charity commissioner has stopped it from sort of, you know, taking any further action. So formation of the selection committee itself is becoming a challenge. So I think the board meeting comes up, they're going to have to debate what happens if a successor is not found or they are unable to complete the processes required to appoint a successor. And therefore what is that plan be? Do they ask Chandra to continue for next and as an extension? Uh do they have an interim CEO? I think those are the kind of things that it will have to grapple with in the board meeting.

07:23 Speaker A

Hetal, very briefly, you have 60 seconds. Any implications for listing that listing might have for big infrastructure projects such as, you know, reviving Air India or uh building up the chip manufacturing capability.

07:43 Hetal

I think it uh it doesn't impact them directly right now, but it does bring these new projects under greater public scrutiny. and therefore uh incremental investments will therefore have to be uh far more judiciously done and that flexibility reduces.