Why Tata Group stocks took a beating in markets on Monday?

Tata Chemicals declines over 10 per cent


Shares of Tata Chemicals, which rose over 40 per cent in the last six trading sessions, came under selling pressure on Monday, with the stock declining over 10 per cent.

The stock took a beating amid reports that Tata Group is trying to avoid Tata Sons IPO.

While Tata Chemicals was the biggest loser among the Tata Group companies, shares of various other Tata Group firms also declined on Monday.

Shares of Rallis India Ltd, a subsidiary of Tata Chemicals, came down by over 5 per cent, Tata Consumer Products declined over 3 per cent; Tata Communications, Tata Steel, Indian Hotels Co, and Tata Power declined over 2 per cent. Titan and Tata Motors too faced selling pressure, coming down over 1 per cent each.

As per Reserve Bank of India norms, Tata Sons, being an upper-layer non-banking finance company, has to go public over the next 18 months. The company was expected to list within the next 1.5 years as the RBI classified Tata Sons as an upper-layer NBFC last year.

However, media reports suggest that Tata Sons is now looking at the option to restructure its balance sheet in a bid to avoid listing. Sources told CNBC-TV18 that Tata Sons is not likely to be listed in the immediate future.

According to an Economic Times report, if the company reorganises debt or transfers holding in Tata Capital to another company, Tata Sons could get deregistered and avoid going public.

The valuation is derived by summing up all investments of Tata Sons across listed and unlisted companies/equities, preference shares and mutual funds, according to a Spark Capital report.

Tata Group had earlier sought an exemption to the listing rule, but the central bank rejected the plea. Media reports said Tata Sons has approached financial and legal experts to find a solution.

Tata Sons is mostly owned by Dorabji Tata Trust (28 per cent) and the Ratan Tata Trust (24 per cent). The other promoter trusts own 14 per cent and the Cyrus Mistry family-run Sterling Investment Corporation and Cyrus Investments own 9 per cent each. Tata Motors and Tata Chemicals own 3 per cent each, Tata Power (2 per cent) and Indian Hotels hold 1 per cent. Others hold 7 per cent.


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