Tata Trusts propose Tata Sons rejig to keep it private

Tata Trusts, the majority owner of Tata Sons, have proposed merging two operating companies with the group's holding company in a restructuring aimed at allowing Tata Sons to shed its regulatory classification as a non-banking financial company and a core investment company, potentially removing the need for a stock-market listing.

The proposal, announced on Monday, involves merging Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons. The Trusts have asked the Tata Sons board to consider the plan and seek a prior no-objection certificate from the Reserve Bank of India.

The proposed structure would turn Tata Sons back into an operating company alongside its role as the Tata Group's holding company, with operating businesses and revenues sitting directly within the parent. The Trusts said this would ensure the reorganised entity does not meet the regulatory criteria for either an NBFC or a core investment 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 a non-banking financial company (NBFC) nor a core investment company (CIC)," the Trusts said in a statement.

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, while income from financial assets would stand at Rs 40,072 crore, according to the Trusts. Net assets would total Rs 200,158 crore, with investments in Tata Group companies accounting for Rs 177,120 crore, or less than 90 per cent of net assets.

"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," it said. "Given that Tata Sons Pvt Ltd (TSPL) will also cease to be a CIC upon the conclusion of the proposed reorganization, TSPL will be required to surrender its certificate of registration."

The restructuring comes amid a widening disagreement between Tata Trusts and the Tata Sons board over the future ownership and governance of the holding company. At the heart of the dispute is whether Tata Sons should remain an unlisted private company or comply with the RBI framework that could require it to list.

The Trusts, chaired by Noel Tata since October 2024, have consistently opposed a listing. The Trusts' boards resolved in July 2025 that efforts should be made to retain Tata Sons as an unlisted private company. Noel has argued that the existing structure, under which philanthropic trusts control the holding company, is central to the Tata model.

The listing question became more pressing after the RBI classified Tata Sons as an upper-layer NBFC in 2022, a designation that carries a listing requirement. Tata Sons subsequently sought to exit the regulatory framework, but the RBI rejected its request in September, leaving the company facing the listing issue.

The Tata Sons board has since backed steps toward compliance, while the Trusts have pushed for alternatives that would allow the company to remain private.