Tata Trusts propose merging two firms into Tata Sons to shed NBFC tag and stay private

Tata Trusts, which holds a 66 per cent stake in Tata Sons Private Limited, have proposed a strategic reorganisation of the Tata Group’s holding company that would merge two operating businesses into it — in a fresh bid to take Tata Sons out of the Reserve Bank of India’s regulatory framework for non-banking financial companies and keep it unlisted.

Under the plan, unveiled on Monday 28 September, Tata Electronics Systems Solutions Private Limited (TESS) and Tata Consulting Engineers (TCE) would be amalgamated with Tata Sons. The Trusts said the move would restore an operating model under which the holding company has its own businesses and revenues alongside its role as the group’s holding entity.

The numbers behind the move

Tata Trusts said the amalgamated entity would, as of 31 March 2026, have operating revenues of ₹1.05 lakh crore — far exceeding income from financial assets of ₹40,072 crore and constituting 64.3 per cent of total income. That would ensure financial investments do not form the dominant source of income, taking Tata Sons outside the principal business criteria for an NBFC.

Its net assets would aggregate ₹2,00,158 crore, with investments in group companies at ₹1,77,120 crore — below the 90 per cent threshold that defines a core investment company (CIC).

The proposal follows the RBI’s rejection on 11 September of Tata Sons’ earlier application to surrender its CIC registration, and comes amid a standoff between the Trusts and the Tata Sons board over whether the holding company should remain private or move towards a stock-market listing.

What happens next

The Trusts, chaired by Noel Tata, submitted the proposal to Tata Sons chairman N. Chandrasekaran on Monday evening and forwarded a copy to the RBI. The merger would require a prior no-objection certificate from the central bank under the RBI’s Voluntary Amalgamation Directions, 2025. After completion, Tata Sons would surrender its CIC certificate of registration.

The plan is in line with unanimous resolutions passed by the boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025, committing that “all endeavours should be made to ensure that the status of Tata Sons as an unlisted private company should continue.” The Trusts noted that Tata Consultancy Services had been a business division of Tata Sons until its demerger in 2004 — a return, in their framing, to how the group operated for nearly 80 years of its century-long history.

Sources

• The Hindu: Tata Trusts proposes recast of Tata Sons to avoid listing
• The HinduBusinessLine: Tata Trusts propose merger plan for Tata Sons; say NBFC, CIC rules won’t apply to new entity