Tata Trusts propose reorganisation of Tata Sons to exit NBFC framework, avoid listing

Tata Trusts on Monday proposed a strategic reorganisation of the group holding company that would allow it to cease being classified as a non-banking financial company (NBFC) or a core investment company (CIC).

The proposed reorganisation involves the merger of Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons.

The Tata Trusts, which hold a 66% stake in Tata Sons, have written to the Tata Sons board to consider and approve the proposal and take necessary steps, including applying to the Reserve Bank of India (RBI) for the required no-objection certificate.

Under the proposed structure, the amalgamated entity would have operating revenues of ₹1,05,043 crore as of March 31, 2026, compared with ₹40,072 crore of income from financial assets.

Operating revenues would account for 64.3% of the total income of the resultant entity, the Trusts said.

"The amalgamated entity... will not meet the 'principal business criteria' of an NBFC," the Trusts said, adding that it would also not meet the conditions applicable to a CIC.

The resultant entity would have net assets of ₹2,00,158 crore, of which investments in group companies would amount to ₹1,77,120 crore, representing less than 90% of its aggregate net assets.

An amalgamation of operating, non-financial companies such as TESS and TCE with Tata Sons, which is an NBFC, would have to be undertaken in accordance with the RBI's Non-Banking Financial Companies – Voluntary Amalgamation Directions, 2025, including the requirement for a prior no-objection certificate from the central bank.

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

The proposal comes after the RBI rejected Tata Sons' application to surrender its registration as an NBFC, reviving the possibility of a public listing of the holding company.

The Tata Trusts have opposed a listing and have been seeking alternatives to preserve Tata Sons as an unlisted private company.

Earlier this month, Tata Sons' board approved the reappointment of N Chandrasekaran as executive chairman for another five years after his current tenure ends on February 20, 2027.

The board said Chandrasekaran agreed to reconsider his decision not to seek another term after the company's Nomination and Remuneration Committee unanimously requested him to do so. The board subsequently voted by a majority to reappoint him.

Tata Trusts Chairman Noel N Tata opposed the move at the board meeting and maintained that the resolution was legally invalid.

The Tata Trusts said the proposed reorganisation was not a new pathway for Tata Sons, which had operating businesses and operating revenues for almost 80 years of its 100-year existence.

It cited the example of Tata Consultancy Services, which was a business division of Tata Sons until 2004 before being demerged into a separate subsidiary.

The Trusts said the proposal was also in line with the unanimous resolutions passed by the boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025, under which all endeavours were to be made to ensure that Tata Sons remained an unlisted private company.

"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," the statement said.