From TCS, Titan to Tata Tele - Tata Group stocks fall as Trusts plans move to prevent holdco listing | Details here

Most Tata Group stocks suffered losses in morning trade on Tuesday, 29 September, after reports emerged that Tata Trusts has proposed a restructuring that would merge two of its operating companies with the Group's holding company (holdco), Tata Sons, in a bid to sidestep its regulatory classification as a core investment company (CIC), to avoid the requirement of a stock market listing.

Group stocks such as Tata Teleservices, Tata Motors PV, Titan, TCS, Tata Chemicals, Tata Power, Tata Steel, and Tata Tech plunged up to 5% during the morning session.

Stocks such as Tata Capital, Tata Consumer, Tata Elxsi, Tata Investment, Trent, and Voltas also declined significantly.

Tata Trusts, the largest stakeholder of Tata Sons, has proposed the merger of Tata Electronics Systems Solutions (TESS) and Tata Consulting Engineers (TCE) with Tata Sons.

Tata Trusts has asked the holding company's board to consider the plan and seek a prior no-objection certificate (NOC) from the RBI, as per a PTI report.

The merger will help the company avoid being classified as either a CIC or a non-banking financial company (NBFC), according to the philanthropic entities, since the merged entity will have net assets of ₹2,00,158 crore, while its investments in group companies will amount to ₹1,77,120 crore -less than 90% of its total net assets.

The Reserve Bank of India (RBI) considers Tata Sons as an upper-layer non-banking financial company (NBFC) and a core investment company (CIC).

The RBI classifies companies with more than 50% of their income from financial assets as NBFCs. Further, it defines a CIC as an NBFC that has at least 90% of its assets invested in shares, bonds, or loans within group firms.

As per RBI rules, an NBFC-UL must be listed on the stock exchanges within three years of being identified in that category.

Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.

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