The proposed reorganisation of Tata Trusts essentially entails the merger of ‘Tata Electronics Systems Solutions Private Limited’ (TESS) and ‘Tata Consulting Engineers ‘(TCE) with Tata Sons, the company said.
Also read: Chandra reappointment move illegal: Neol Tata
The move comes amid Reserve Bank of India’s direction for Tata Sons to be listed and the leadership tussle. While Tata Sons board has re-appointed N Chandrasekaran as Chairman and also gave nod for Tata Sons listing, Tata Trusts Chairman Noel Tata has opposed the moves. Shapoorji Pallonji Group (SP Group) has backed the proposal to list Tata Sons.
Also read: Bombay House Divided
The proposed strategic reorganization of the business and operations of Tata Sons is not a new pathway. Tata Sons has, for almost 80 years out of its 100-year existence, always had operating businesses and operating revenues, which enabled it to fund its other, newer business ventures, Tata Trusts said in a statement.
Also read: “Listing will destroy Tata Sons character”
To recall, as recently as 2004, Tata Consultancy Services was a business division of Tata Sons before it was demerged into a separate subsidiary. This was also the case with other operating businesses of Tata Sons,it noted.
Also read: SP Group backs Tata Sons IPO
Accordingly, the proposed reorganization will result in Tata Sons reverting to its previous operating model, with its own operations and revenues, in addition to being a holding company for the Tata Group. This will also be in line with the previous classification (after 2004) by RBI of Tata Sons as a “non-banking, non-financial company”.
Also read: Decoding the Tata conundrum
The amalgamated entity shall have, as of March 31, 2026, operating revenues of Rs 105,043 crores, far in excess of its income from financial assets (Rs 40,072 crores) constituting 64.3 per cebt of the total income of the amalgamated entity.
Also read: TVS Trick to Solve the Tata Tangle?
The amalgamated entity will not meet the “principal business criteria” of an NBFC and will also not meet the conditions applicable to a Core Investment Company (Net Assets aggregating Rs 200,158 crores, out of which investment in Group Companies shall be Rs 177,120 crores representing less than 90 per cent of the aggregate net assets of the resultant entity).
An amalgamation of genuine operating, non-financial companies (such as TESS and TCE) with an NBFC (such as Tata Sons) will need to be undertaken in accordance with the provisions of the Reserve Bank of India (Non-Banking Financial Companies – Voluntary Amalgamation) Directions, 2025, including the requirement to obtain a prior ‘no objection certificate’ of the RBI. Given that Tata Sons will also cease to be a Core Investment Company upon the conclusion of the proposed reorganization, it will require to surrender its certificate of registration.
The Tata Trusts believe that the proposed reorganization and action plan for compliance would be in the best interests of the Tata Group as well as its stakeholders, in addition to being a regulatory permissible and compliant form of reorganization of a Core Investment Company.
The Tata Trusts have, accordingly, written to the Tata Sons Board to consider and approve the proposal, and to take necessary steps, including applying to the RBI for the necessary ‘no-objection certificate’ as required for the proposed merger and reorganisation, the statement said.
The Tata Trusts said along with Tata Sons it will engage with the RBI on all aspects of the proposed reorganisation.
The proposed amalgamation and consequential steps are in line with regulatory compliance requirements and the unanimous resolutions passed by the Boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025 wherein it was agreed that all endeavours should be made to ensure that the status of Tata Sons as an unlisted private company should continue, the statement said.
“It also has the advantage of preserving the more than 100-year-old distinctive and unique organisational structure of the Group, which has always focussed on long term strategic initiatives geared towards nation building and the welfare of the disadvantaged and the excluded,” it added.