Tata Trusts propose merger of two Tata units with Tata Sons to avoid listing

Noel Tata-led Tata Trusts have proposed a restructuring of Tata Sons to keep the group holding company unlisted. The plan involves merging two unlisted operating companies, Tata Electronics Systems Solutions Private Limited (TESS) and Tata Consulting Engineers (TCE), with Tata Sons.

The Tata Trusts, which hold a 66% stake in Tata Sons, have written to the company’s board seeking approval for the proposal. The proposed restructuring would require a no-objection certificate from the Reserve Bank of India (RBI), the Trusts said.

The Trusts said the proposed restructuring would take Tata Sons back to an operating model it followed for much of its history. "TSPL 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," the statement said.

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Tata Consultancy Services was a business division of Tata Sons as recently as 2004 before it was demerged into a separate subsidiary. The Trusts said the same model had been followed with other operating businesses.

The proposed reorganisation would therefore leave Tata Sons with its own operations and revenues while continuing to serve as a holding company for the Tata Group.

The Trusts said this would also be in line with the RBI's earlier classification of Tata Sons, after 2004, as a "non-banking, non-financial company".

According to the Trusts, the merged entity would have had operating revenues of Rs 1,05,043 crore as of March 31, 2026. That would account for 64.3% of its total income, compared with Rs 40,072 crore of income from financial assets.

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The Trusts said the entity would therefore not meet the "principal business criteria" for classification as an NBFC. It would also not qualify as a CIC, based on the figures provided by the Trusts.

The amalgamated entity would have net assets of Rs 2,00,158 crore, of which investments in group companies would account for Rs 1,77,120 crore. That would be less than 90% of its aggregate net assets, the Trusts said.

Since Tata Sons would cease to be a CIC after the restructuring, it would also have to surrender its certificate of registration, the Trusts said.

"The Tata Trusts believe that the proposed reorganisation 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 CIC," the statement said.

The Trusts said they had asked the Tata Sons board to consider and approve the proposal and take the necessary steps, including approaching the RBI for its no-objection certificate.

Tata Trusts chairman Noel Tata has opposed the proposed listing of Tata Sons, arguing that taking the holding company public could alter the Tata Group's century-old ownership and operating model.

At the September 17 Tata Sons board meeting, Noel said the RBI's September 11 communication rejecting Tata Sons' request to surrender its NBFC registration did not direct the company to list.