Mumbai: Tata Trusts, which own 66 per cent of Tata Sons, have proposed merging two operating companies with the Tata Group’s holding company in a restructuring that would allow it to shed its classification as a non-banking financial company and a core investment company, helping it retain its status as an unlisted private company.
The proposed restructuring involves the merger of Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons – the holding company of the salt-to-software, cars and airline conglomerate, according to a statement issued by the Tata Trusts on Monday.
The Trusts, which have vehemently opposed listing the holding company, have asked the Tata Sons board to consider the proposal and take necessary steps, including seeking a prior no-objection certificate from the Reserve Bank of India for the proposed merger.
The Trusts said the proposed structure would allow Tata Sons to return to its earlier operating model, with its own businesses and revenues while continuing to function as the holding company for the Tata Group.
“The proposed reorganization will result in TSPL reverting to its previous operating model, with its own operations and revenues, in addition to being a holding company for the Tata Group,” the Trusts said in a release.
The restructuring would also bring Tata Sons in line with its earlier classification by the Reserve Bank of India as a “non-banking, non-financial company”, according to the Trusts.
Tata Sons to have ₹1.05 lakh crore operating revenueThe amalgamated entity would have operating revenues of ₹1,05,043 crore as of March 31, 2026, compared with income from financial assets of ₹40,072 crore, the Trusts said.
The proposed entity would therefore not meet the “principal business criteria” for classification as an NBFC.
It would also not meet the conditions applicable to a CIC. The Trusts said the combined entity would have aggregate net assets of ₹2,00,158 crore, including ₹1,77,120 crore of investments in group companies. These investments would account for less than 90% of aggregate net assets.
RBI approval required
The proposed merger will require prior regulatory approval from the RBI. The Trusts said the amalgamation of operating, non-financial companies such as TESS and TCE with Tata Sons would need to comply with the RBI (Non-Banking Financial Companies – Voluntary Amalgamation) Directions, 2025.
This includes obtaining a prior no-objection certificate from the central bank.
“Given that TSPL will also cease to be a CIC upon the conclusion of the proposed reorganization, TSPL will require to surrender its certificate of registration,” the Trusts said.
The Trusts have written to the Tata Sons board seeking consideration and approval of the proposal, including taking necessary steps to approach the RBI.
“The Tata Trusts, along with TSPL, will engage with the RBI on all aspects of the proposed reorganisation,” it said.
Proposal seeks to preserve Tata Sons structure
The Trusts said Tata Sons had operated with its own businesses and revenues for almost 80 years of its 100-year existence. It cited Tata Consultancy Services, which was a business division of Tata Sons until it was demerged into a separate subsidiary in 2004.
The Trusts said the proposed restructuring would preserve the group’s existing organisational structure while addressing regulatory requirements.
It said the plan was “a regulatory permissible and compliant form of reorganization of a CIC” and was in the best interests of the Tata Group and its stakeholders.
The proposal is also in line with unanimous resolutions passed by the boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025 to make efforts to retain Tata Sons’ status as an unlisted private company.
