Tata shares slip as trusts' proposal clouds Tata Sons listing prospects

Sept 29 : Tata group shares fell on Tuesday after the controlling charities proposed a restructuring of the holding company to prevent a central-bank-mandated listing, disappointing some investors.

A group of Tata charities collectively known as Tata Trusts on Monday proposed merging two group entities with Tata Sons, the principal holding company of the salt-to-software conglomerate.

Tata Trusts and the holding company have been at odds over the re-appointment of N Chandrasekaran as chairman and on a path to comply with the mandate to list after the Reserve Bank of India rejected Tata Sons' request to give up its registration as a so-called upper-layer non-banking finance company.

The proposal dampens expectations of a listing that had gathered momentum, analysts said.

"A listing was expected to unlock value for shareholders of Tata group companies that own stakes in Tata Sons, particularly Tata Chemicals and Tata Investment Corp," said Neeraj Dewan, an independent market analyst in New Delhi.

"However, the reaction is largely sentiment-driven for now, as the proposal would still require approval from both (the board of) Tata Sons and the RBI, which has so far maintained its direction for the company to list."

Tata Sons did not immediately respond to Reuters request for comment.

Shares of Tata Motors Passenger Vehicles fell 2 per cent in Mumbai, while Tata Investment Corp lost 2.1 per cent and Tata Chemicals shed 3.1 per cent. Trent and Tata Consultancy Services were down about 1 per cent each.

Tata Sons owns significant stakes in TCS, Tata Motors, Tata Steel and Trent.

So far this year, TCS has lagged group shares, slumping nearly 35 per cent amid IT sector woes. India's benchmark Nifty 50 index has fallen 13.5 per cent over the same period.