Tata Trusts Firmly Opposes SP Group’s Plan to Transfer Tata Sons Shares

Tata Trusts Stands Firm Against SP Group’s Proposal: The Tata Trusts have reiterated their stance against the Shapoorji Pallonji (SP) Group’s attempt to use its 18.4% stake in Tata Sons as collateral for raising new loans. In a detailed response, Siddharth Sharma, CEO of Tata Trusts, emphasized, “Tata Sons’ shares are not freely transferable and are subject to the Articles of Association.” This statement quashes speculations of a potential policy shift following Noel Tata’s appointment as chairman of Tata Trusts in October.

The SP Group had planned to utilize its Tata Sons shares as collateral to replace existing loans worth ₹22,000 crore, repayable by March 2025. Currently, these shares are pledged with financial institutions. The Group sought to transfer them to new investors to refinance the debt, a move opposed by Tata Trusts.

Historical Context: Governance and Share Transfer Rules

Tata Sons, the holding entity of the Tata Group, underwent significant restructuring after the ouster of Cyrus Mistry as chairman in 2017, which included its conversion into a private company. This change mandated stricter controls on share transfers, reinforcing the role of the Articles of Association in regulating such transactions.

“Tata Trusts have consistently opposed the use of Tata Sons shares as collateral,” noted Sharma, citing governance principles embedded in the company’s operational framework. The four-member executive committee of Tata Trusts, comprising Noel Tata, Venu Srinivasan, Vijay Singh, and Mehli Mistry, unanimously opposed the proposed share transfer. This committee plays a pivotal role in evaluating strategic decisions before forwarding them to the Trusts’ board.

SP Group’s Perspective and Legal Standing

The SP Group has defended its ability to raise capital against its pledged shares, referencing the Supreme Court’s 2021 ruling that upheld their rights. A spokesperson for the Group remarked, “The Articles of Association regulate share transfers, and our previous capital-raising efforts have adhered to these guidelines.”

The SP Group first pledged 9.19% of its shares in 2020, followed by another 9.18% in 2021, raising ₹22,000 crore. Despite restructuring efforts and asset sales, including Eureka Forbes and Sterling and Wilson Renewable Energy Ltd, the Group continues to seek refinancing options to address its debt obligations.

Impact

The dynamics between the SP Group and Tata Trusts gained attention after Noel Tata, brother-in-law of Cyrus Mistry, assumed leadership at Tata Trusts. Media speculation hinted at a potential thaw in relations, but Sharma’s statement reaffirms Tata Trusts’ unwavering position.

Noel Tata, alongside the Trusts’ leadership team, has maintained the legacy of robust governance established by Ratan Tata, focusing on preserving the integrity of Tata Sons’ operational framework.

Challenges Ahead

As the March 2025 loan repayment deadline approaches, the SP Group faces mounting pressure to secure alternative financing. Discussions with Power Finance Corporation, among others, have reportedly stalled, leaving the Group to explore other avenues for debt restructuring.

The conglomerate, reeling from setbacks following the 2016 leadership upheaval and the tragic demise of Cyrus and Pallonji Mistry, has made progress in debt reduction. Public offerings like Afcons Infrastructure Ltd have brought in significant funds, but the road ahead remains fraught with challenges.

Buy now

Tata Trusts Firmly Opposes SP Group’s Plan to Transfer Tata Sons Shares

Must read

US Immigration Authorities Arrest Over 32,000 in Just 50 Days

Canada Strikes Back with $21 Billion Tariffs on U.S. Goods

Trump’s Second Term Sees Billionaires Lose Over $200 Billion in Wealth

Train Hijacked in Pakistan, Baloch Rebels Release Chilling Video