Tata Trusts, which holds a 66% stake in Tata Sons has proposed a strategic reorganisation of the holding company that would involve the merger of Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons.
According to Tata Trusts, the proposed restructuring is aimed at ensuring that the resulting entity would no longer qualify as either a Non-Banking Financial Company (NBFC) or a Core Investment Company (CIC) under applicable regulatory criteria, while retaining the operating structure of the Tata Group.
The proposal has been placed before the Tata Sons board, with Tata Trusts seeking approval to take the necessary steps, including applying to the Reserve Bank of India (RBI) for a no-objection certificate.
Operating businesses to return to Tata Sons
The proposed reorganisation would bring operating businesses back into Tata Sons, restoring a structure that existed for much of the company’s history.
Tata Trusts said Tata Sons had operating businesses and revenues for almost 80 years of its 100-year existence, which helped fund newer business ventures. As recently as 2004, Tata Consultancy Services was a business division of Tata Sons before being demerged into a separate subsidiary.
The Trusts said the proposed structure would therefore see Tata Sons return to an operating model in which it has its own businesses and revenues alongside its role as the holding company for the Tata Group.
The structure would also be consistent with Tata Sons’ classification by the RBI after 2004 as a “non-banking, non-financial company”, according to the Trusts.
₹1.05 lakh crore operating revenue
The proposed amalgamated entity would have operating revenues of ₹1,05,043 crore as of March 31, 2026, according to the figures cited by Tata Trusts.
This would account for 64.3% of total income, compared with income from financial assets of ₹40,072 crore.
Tata Trusts said the resulting entity would consequently not meet the principal business criteria applicable to an NBFC.
The entity would also not meet the conditions applicable to a CIC. Its aggregate net assets would stand at ₹2,00,158 crore, of which investments in group companies would account for ₹1,77,120 crore. This would represent less than 90% of the resultant entity’s aggregate net assets.
RBI approval required
The proposed merger of operating, non-financial companies such as TESS and TCE with Tata Sons, which is currently an NBFC, would have to comply with the RBI’s Non-Banking Financial Companies – Voluntary Amalgamation Directions, 2025.
This includes obtaining a prior no-objection certificate from the RBI.
Since the proposed restructuring would also result in Tata Sons ceasing to qualify as a CIC, the company would have to surrender its certificate of registration, Tata Trusts said.
The Trusts and Tata Sons are expected to engage with the RBI on the proposed reorganisation and related regulatory requirements.
Unlisted structure to continue
Tata Trusts said the proposed reorganisation would preserve Tata Sons’ status as an unlisted private company, in line with unanimous resolutions passed by the Boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025.
The Trusts said the restructuring would also preserve the Tata Group’s more than 100-year-old organisational structure, which has historically focused on long-term strategic initiatives, nation building and the welfare of disadvantaged and excluded sections of society.
The proposal will now require consideration by the Tata Sons board and the necessary regulatory process, including engagement with the RBI.