Tata Trusts proposes Tata Sons rejig, merging two firms with it to avoid listing
&imwidth=600&imheight=450&format=webp&quality=medium "Tata Trusts proposes Tata Sons rejig, merging two firms with it to avoid listing")
Tata Trusts chairman Noel Tata Photograph: (ANI)
The proposed restructuring would enlarge the company by absorbing two operating, non-financial businesses and give Tata Sons substantial operating revenues in addition to the income it earns from its investments in Tata Group companies.
Tata Trusts has proposed merging two operating companies with the Tata Group’s holding company in a move aimed at taking Tata Sons out of the Reserve Bank of India’s regulatory framework for non-banking financial companies and core investment companies and letting it remain unlisted.
Tata Trusts, which holds a 66 per cent stake in Tata Sons, has proposed merging Tata Electronics Systems Solutions Private Limited (TESS) and Tata Consulting Engineers (TCE) with Tata Sons Private Limited, in the restructuring bid.
The proposal would allow Tata Sons to retain its status as an unlisted private company if approved by the Tata Sons board and the Reserve Bank of India (RBI).
Tata Trusts has written to the company’s board asking it to approve the restructuring and apply to the RBI for the necessary no-objection certificate. “The Tata Trusts, along with TSPL, will engage with the RBI on all aspects of the proposed reorganisation,” the Trusts said in a statement.
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The plan aims to avoid public listing of Tata Sons after the RBI rejected its application to surrender its registration as a CIC earlier this month.
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As an upper-layer NBFC, Tata Sons is subject to enhanced regulatory requirements, including mandatory listing.
The proposed restructuring would enlarge the company by absorbing two operating, non-financial businesses and give Tata Sons substantial operating revenues in addition to the income it earns from its investments in Tata Group companies.
As per Tata Trusts, the amalgamated entity would have had operating revenues of Rs 1,05,043 crore as of March 31, 2026, compared with an income of Rs 40,072 crore from financial assets.
Operating revenues would constitute 64.3 per cent of the resultant entity’s total income, and on this basis, the restructured Tata Sons would not meet the RBI’s “principal business criteria” for classification as an NBFC.
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The restructuring will also take Tata Sons outside the definition of a CIC, as the entity would have aggregate net assets of Rs 2,00,158 crore, of which Rs 1,77,120 crore—or around 88.5 per cent—would comprise investments in group companies.
This would bring the proportion below the 90-per cent threshold applicable to CICs. If the merger is completed, Tata Sons would operate businesses directly while continuing to act as the principal holding company of the Tata group.
For nearly 80 years of its existence, Tata Sons had operating businesses and revenues that helped fund newer ventures of the group.
The proposed merger can be implemented only after regulatory clearance. Tata Sons will have to obtain the RBI’s prior no-objection certificate. Once the restructuring is completed, Tata Sons will cease to qualify as a CIC and will be required to surrender its certificate of registration.
The Trusts also linked the proposal to unanimous resolutions passed by the boards of the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust in July 2025. The two boards had agreed that all efforts should be made to preserve Tata Sons’ status as an unlisted private company.
