Tata Sons and Tata Trusts have reportedly offered to buy back 4–5% of the SP Group’s stake to help ease its debt.
The proposal faces hurdles heavy capital gains tax on buybacks and the need for Tata Sons to fund the deal without fresh borrowing after surrendering its NBFC licence.
The SP Group, which owns 18.4% of Tata Sons, has pledged its shares to refinance debt.
Tata Sons and its majority owners, Tata Trusts, have reportedly offered to dilute part of the unlisted shares held by the Shapoorji Pallonji (SP) Group to help it manage its massive debt burden. However, the proposed share dilution may require government intervention.
According to a Moneycontrol report, Tata Group has offered to buy back 4–5% of the stake held by the Mistry family-led SP Group. The Tatas are still deliberating on how to proceed with the transaction, excluding an initial public offering. But any such plan would face two hurdles: a potential capital gains tax from stock buybacks under current laws and funding constraints, as Tata Sons must finance the buyback without taking new debt after surrendering its NBFC licence.
The SP Group is the largest shareholder in Tata Sons after the family-owned charitable trusts that control the company. It has pledged its entire 18.4% stake in Tata Sons to refinance its debt, estimated at up to ₹60,000 crore. These borrowings were raised to fund capital-intensive projects under its engineering, procurement and construction (EPC) businesses. The group’s debt burden worsened following the pandemic.
Since then, the SP Group has been pushing Tata Sons to list on the secondary market to provide liquidity, but the salt-to-steel conglomerate wants to remain privately held.
Earlier this year, Tata Trusts asked Tata Sons Chairman N. Chandrasekaran to engage with the SP Group to explore a possible exit route and avoid a public listing.
This development comes amid reports of a tussle among Tata Trustees over appointments to the Tata Sons board. It was earlier reported that two Union ministers are expected to meet Tata Group executives in New Delhi.
Government May Step In
The latest reports suggest that the government may intervene in talks with SP group as well, given the scale and nature of the debt exposure. A significant portion of the group’s borrowings has been raised through private credit funds and the government is keen to prevent a loan default by a reputed business house.
Of the estimated ₹60,000 crore debt, around ₹29,000 crore has reportedly been refinanced at a higher cost. A recent internal assessment valued Tata Sons at around $70 billion (₹6.21 lakh crore), implying that a 4–6% stake could be worth roughly ₹25,000 crore, the report said.
Tata Sons and Tata Trusts are expected to convey to government officials that there is broad agreement within the group to extend liquidity support to the SP Group. They are also likely to seek concessions on the earlier-mentioned concerns regarding capital gains tax and group-level debt.
The group has reportedly assured the Reserve Bank of India (RBI) that Tata Sons will continue operating as a debt-free holding company. The assurance was made when Tata Sons surrendered its NBFC licence in September last year. The licence, granted in 2022, carried a three-year deadline for Tata Sons to list its shares. That deadline expired on September 30, 2025.
The group is now awaiting the RBI’s decision on whether it will relax the listing mandate.
