Listed group cos hold 14% in Tata Sons worth Rs 70,000 crore

They should sell Tata Sons shares to reduce debt: Wadia

Listed companies in the Tata group hold a 14 per cent stake in Tata Sons worth Rs 70,000 crore that is being used by the Tata trusts to wield control over them. Tata Motors holds Tata Sons shares worth Rs 8,600 crore, Tata Steel Rs 10,000 crore and Tata Chemicals Rs 7,200 crore. 

These debt-laden Tata companies should sell their shares to reduce their finance costs, Nusli Wadia, an independent director on the boards of Tata Motors and Tata Chemicals, said. 

Wadia was ousted as independent director from the Tata Steel board on Wednesday.

“Tata Motors has high cross-holdings in Tata companies, the largest of which is Tata Sons valued at Rs 8,600 crore. The listed companies as a whole have blocked Rs 70,000 crore in Tata Sons shares with the sole purpose of shoring up voting rights of the trusts. It is for shareholders who own 70 per cent of Tata Motors to decide whether you want to be holders of Tata Sons shares with minimum return, zero liquidity and no exit. This will apply to all shareholders of Tata companies,” Wadia said in a letter to Tata Motors' shareholders before the emergency general meeting held today. 

 

Tata Steel could save finance costs by Rs 1,400 crore if it sold its stakes in unlisted group companies, Wadia said in a representation to shareholders before the meeting.

Tata Sons, the holding company of the Tata group, is in the midst of a legal battle following the ouster of its chairman Cyrus Mistry and appointment of Ratan Tata as interim chairman. A public battle has broken out, with many independent directors backing Mistry. 

While Wadia is being removed by Tata Sons, two independent directors of Tata Global, Analjit Singh and Darius Pandole, have resigned with Singh citing falling corporate governance levels in the group. More independent directors across the Tata group are expected to resign. On Tata Chemicals, Wadia said, “On the one hand Tata Chemicals is burdened with heavy debt and has substantial funding requirements for its future strategy. And on the other, Tata Chemicals has large cross-holdings in Tata Sons, Tata Teleservices, Tata Projects, Tata Industries, Tata Services and other listed companies.” During the last 10 years, Tata Chemicals’ debt grew from Rs 1,827 crore to 8,695 crore, he added.