Tata Sons clears Rs 20,000 crore debt to avoid mandatory share market listing

This decision allows Tata Sons to maintain its status as a closely held company, sidestepping the need to list its shares on the stock exchange, which would have been required under the Reserve Bank of India (RBI) regulations had the debt remained, as per reports.

The Rs 20,300 crore repayment in debt marks a significant reduction in the company's liabilities, excluding only non-convertible debentures and preference shares worth Rs 363 crore, reports The Economic Times.

Tata Sons has allocated Rs 405 crore in deposits with the State Bank of India (SBI) to cover the remaining obligations and has provided an undertaking to the RBI as part of the surrender of its registration certificate.

The central bank classified Tata Sons as a Non-Banking Financial Company – Upper Layer (NBFC-UL) in September 2022.

Under this classification, companies are required to list within three years, reports said.

However, Tata Sons, with the substantial debt repayment, has significantly lowered its promoter risk profile, thereby exempting it from the listing requirement and allowing it to relinquish its NBFC registration, as per reports.

As of March 31, 2023, Tata Sons had a net debt of Rs 20,642 crore, and by March 31, 2024, this had been converted into a net cash position of Rs 2,670 crore, reports Business Standard.

The company, in the previous fiscal year, had already reduced its debt by 25 percent.