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 restructuring is aimed at ensuring the reorganised Tata Sons does not meet the regulatory criteria for either an NBFC or a core investment company, the Trusts said.
The proposed restructuring comes against a backdrop of growing differences between Tata Trusts and the board of Tata Sons over its future ownership structure. The Trusts, chaired by Noel Tata since October 2024, have opposed listing Tata Sons and in July 2025 unanimously resolved that efforts should be made to retain the company as an unlisted private entity.
The position gained urgency after RBI classified Tata Sons as an upper-layer NBFC in 2022, a status that carries a regulatory listing requirement. Tata Sons has sought to exit the NBFC framework, but the RBI rejected its request in September, leaving the listing issue unresolved.
Also Read : Tata Trusts challenges Chandra’s reappointment, says casting vote cannot override AoA
The dispute has also spilled into the appointment of Tata Sons Chairman N Chandrasekaran. The Trusts had backed his reappointment for a third five-year term in July 2025, but opposed the board’s subsequent decision in 2026 to reappoint him after he indicated he would not seek another term.
Noel Tata and the Trusts argued that the Tata Sons articles required the Trusts’ nominee directors’ support for the appointment and described the board’s decision as invalid. The board has nevertheless backed Chandrasekaran and proceeded with steps linked to regulatory compliance. The latest restructuring proposal offers the Trusts a route to address the listing requirement while preserving Tata Sons as an unlisted private company.
“The Tata Trusts today, as majority shareholders with a 66 per cent stake in Tata Sons Private Limited (TSPL), outlined a strategic reorganisation plan for the company which, when given effect to, would ensure that the reorganised entity would neither be an NBFC nor a core investment company,” it said in the statement.
The proposed reorganisation essentially entails the merger of TESS and TCE with Tata Sons.
As of March 31, 2026, the combined entity would have operating revenue of Rs 105,043 crore, accounting for 64.3 per cent of total income, compared with Rs 40,072 crore of income from financial assets, according to the proposal.
The reorganised entity would have net assets of Rs 200,158 crore, of which investments in group companies would account for Rs 177,120 crore, or less than 90 per cent of total net assets. This would mean it would not meet the principal business criteria for an NBFC or the applicable conditions for a CIC, the Trusts said.
The proposal would also restore an operating structure that Tata Sons followed for much of its history, when the holding company housed operating businesses alongside its investments in Tata Group companies.
Tata Consultancy Services, for example, was a division of Tata Sons until it was demerged into a separate subsidiary in 2004.
The proposed merger will have to comply with the RBI (Non-Banking Financial Companies – Voluntary Amalgamation) Directions, 2025, including the requirement for the central bank’s prior no-objection certificate.
Following completion of the restructuring, Tata Sons would surrender its certificate of registration as a CIC, the Trusts said.
The proposal comes after the boards of the Sir Dorabji Tata Trust and Sir Ratan Tata Trust unanimously resolved in July 2025 that efforts should be made to retain Tata Sons as an unlisted private company.
The Tata Trusts said the proposed structure would preserve the Tata Group’s longstanding organisational model while meeting applicable regulatory requirements. The proposal remains subject to consideration by the Tata Sons board, RBI approval and completion of the merger process.
The Tata Trusts have asked the Tata Sons board to consider the proposal and take steps to obtain the RBI’s prior no-objection certificate, which is required for the proposed amalgamation.
Under the proposed structure, Tata Sons would again have substantial operating businesses and revenues alongside its role as the holding company for the Tata group. The Trusts said the structure is intended to comply with applicable regulations while allowing Tata Sons to remain an unlisted private company.
Tata Sons is currently classified as a core investment company, a category of NBFCs that primarily hold investments in group companies. The proposed merger would materially alter the composition of Tata Sons’ assets and income by bringing operating businesses directly into the company.
The Trusts said Tata Sons had also previously been classified by the RBI as a non-banking, non-financial company after 2004.
The proposed merger would bring operating businesses back into Tata Sons by combining it with TESS and TCE.
The restructuring would allow Tata Sons to retain its position as the privately held holding company at the centre of the Tata group while changing the regulatory basis on which it operates. It would also preserve the group’s existing organisational structure rather than requiring Tata Sons to become a listed company, an issue that has been a focus of the Tata Trusts.
