Tata Sons repays Rs 20,300 crore debt to remain unlisted

Tata Sons has voluntarily surrendered its registration certificate to the Reserve Bank of India after repaying over ₹20,000 crore in debt to remain an unlisted entity, The Economic Times has reported.

As a result, Tata Sons can continue to operate as a closely held company without being required to list its shares on the stock exchange, as mandated by RBI regulations.

The repayment of ₹20,300 crore marks a substantial reduction in Tata Sons’ liabilities, leaving only ₹363 crore in non-convertible debentures and preference shares. Additionally, Tata Sons deposited ₹405 crore with the State Bank of India (SBI) and provided an undertaking to the RBI as part of surrendering its registration certificate.

In September 2022, the RBI designated Tata Sons as a Non-Banking Financial Company–Upper Layer (NBFC-UL), requiring such companies to go public within three years.

In September 2022, the RBI classified Tata Sons as a core investment company that borrows funds from banks and markets to invest in its group companies, as an NBFC-Upper Layer (NBFC-UL).

NBFC-UL needs to be listed 

RBI regulations stipulate that an NBFC-UL must be listed within three years of this classification. However, after significantly reducing its promoter risk profile through debt repayment, Tata Sons is no longer obligated to list its stock and has offered to surrender its registration certificate to the RBI.

Tata Sons reported a 57 percent increase in net profits, reaching ₹34,654 crore for the financial year ending March 2024. During this period, the company's revenues grew by 25 percent, rising to ₹43,893 crore from ₹35,058 crore in the previous year.

The company's total expenses experienced a notable decrease of 27 percent in FY24, falling to ₹2,776 crore from ₹3,794.70 crore in FY23. At the same time, the returns on equity, before exceptional items and tax, were 38.15 percent for FY24.

                                             (By arrangement with livemint.com)