Tata Trusts, the largest shareholder of Tata Sons, has directed chairman N Chandrasekaran to initiate a dialogue with minority shareholder Shapoorji Pallonji Group to provide them with an exit from the holding company of the $180-billion Tata Group. This is the first time Tata Trusts has formally directed Tata Sons to work out an exit route for SP. Previously, under the chairmanship of late Ratan Tata, Tata Trusts had rejected SP’s exit requests, including a vertical split of Tata Sons’ assets and liabilities in proportion to its 18.37% stake in the holdco. The latest decision by Tata Trusts comes as Tata Sons faces a September 30 deadline set by RBI to list itself on the bourses, a move that would automatically allow SP to exit from the holdco, in which it has held a stake since 1928. However, Tata Trusts want Tata Sons to remain privately held and avoid RBI’s listing requirement. Towards this, the holdco paid off all its borrowings, redeemed all its preference shares, and sought to relinquish its status as a core investment company. The request is pending before RBI. Tata Trusts asked Chandrasekaran to “explore all possible avenues to ensure that there is no change in Tata Sons’ current status” and to “fully engage with the RBI on this matter”, read the resolutions passed by the foundations. The Trusts recognised Tata Sons’ endeavours like discharging debts of about Rs 30,000 crore to avoid listing over the past two years and 10 months. In the past, Tata Trusts had disagreed with SP on the valuation of Tata Sons. While Trusts valued SP’s share based on Tata Sons’ book value, applying illiquidity discounts, SP believed its stake should be valued based on Tata Sons’ assets linked to their market value. Tata Sons holds the first right to buy SP’s stake in the company. SP, burdened with debt, has pledged its entire Tata Sons stake to lenders. The relationship between Tata Trusts/Tata Sons and SP deteriorated after they removed the late SP scion Cyrus Mistry from the chairman’s position at the holdco, leading to a legal battle. Ultimately, Tata Trusts/Tata Sons emerged victorious, with the Supreme Court upholding their decision on Mistry’s removal and on converting the holdco from a public limited company to a private one.