Tata Trusts Tables Rs 25,000 Cr Plan As SP Group Seeks Liquidity From Tata Sons Stake

Tata Trusts Chairman Noel N Tata has placed before the Tata Sons board a Rs 25,000-crore plan to provide liquidity to the Shapoorji Pallonji (SP) Group. Under the proposal, SP Group would sell part of its stake in Tata Sons, while Tata Sons would buy and cancel those shares through a selective capital reduction, giving SP Group at least Rs 25,000 crore in cash.

The proposal comes as Tata Sons faces renewed pressure over its listing following the Reserve Bank of India's rejection of its application to surrender its Certificate of Registration as a Core Investment Company.

Under the plan, Sterling Investments Corporation and Cyrus Investments, which hold SP Group's Tata Sons shares, would sell enough shares to generate at least Rs 25,000 crore. The transaction would take place in two tranches over 18 months, with the valuation determined under Rule 11UA of the Income Tax Rules, 1962. The capital reduction would require approval from the National Company Law Tribunal (NCLT).

The proposal comes amid several major developments at Tata Sons. Its board on Thursday approved a five-year extension for Executive Chairman N Chandrasekaran and decided to move ahead with steps towards listing the holding company. Noel Tata opposed both decisions, adding to differences between Tata Trusts and the board.

The SP Group owns about 18.37 per cent of Tata Sons. Earlier discussions had involved selling around seven percentage points, which would leave SP Group with roughly 11.4 per cent. However, the latest proposal does not specify the exact percentage to be sold.

If approved, the immediate result would be at least Rs 25,000 crore in liquidity for SP Group. Its ownership in Tata Sons would fall, while the shares acquired by Tata Sons would be cancelled. Because the total number of outstanding shares would also fall, the relative percentage ownership of remaining shareholders, including Tata Trusts, could increase, depending on the final structure.

For Tata Sons, the transaction could provide a way to address SP Group's liquidity needs without relying entirely on a market sale of its stake. However, it would not automatically settle the listing issue.

The proposal remains subject to valuation, shareholder treatment, regulatory scrutiny and NCLT approval, with no final agreement announced.