Tata Trusts has proposed a restructuring of Tata Sons that would turn the group holding company into a holding-cum-operating company, potentially taking it outside the Reserve Bank of India’s regulatory framework for non-banking financial companies (NBFCs) and core investment companies (CICs), while allowing it to remain private and unlisted.
The trusts, which hold 66% in Tata Sons, have proposed merging Tata Electronics Systems Solutions (TESS) and Tata Consulting Engineers (TCE) into Tata Sons. The proposal was sent to the Tata Sons board on Monday seeking consideration and approval of the proposal, which would also require a no-objection certificate from the RBI.
The move provides a concrete alternative to listing Tata Sons after the RBI rejected its application to surrender its registration. Tata Trusts has maintained that Tata Sons should remain an unlisted private company and had earlier asked its board to examine alternatives to a listing.
Under the proposed restructuring, sizeable operating businesses would be brought directly into Tata Sons, giving the company substantial operating revenues alongside income from its investments in group companies.
The arithmetic is central to the proposal. Based on figures as of March 31, 2026, the amalgamated entity would have operating revenues of Rs 1,05,043 crore, compared with Rs 40,072 crore of income from financial assets. Operating revenues would account for 64.3% of total income, which, according to the trusts, would mean Tata Sons no longer meets the principal business criteria applicable to an NBFC.
The restructuring would also reduce the proportion of Tata Sons’ assets represented by investments in group companies. The merged entity would have net assets of Rs 2,00,158 crore, of which investments in Tata group companies would amount to Rs 1,77,120 crore, or less than 90% of aggregate net assets.
On this basis, the Trusts contend that the reorganised Tata Sons would also cease to meet the conditions applicable to a CIC and could consequently surrender its RBI registration.
The proposal marks the latest turn in the differences between Tata Trusts and Tata Sons over the future structure of the holding company. During the September 17 Tata Sons board meeting, Trusts chairman Noel Tata opposed both N Chandrasekaran’s reappointment as chairman and the decision to begin preparations for a public listing.
The restructuring is also being positioned as a return to Tata Sons’ historical model. For almost 80 years of its century-long existence, Tata Sons had operating businesses and revenues of its own. Tata Consultancy Services, for instance, operated as a division of Tata Sons until it was carved out into a separate company in 2004.
Farokh Subedar, a Tata Sons veteran and consultant to Tata Trusts, said the proposal followed the Trusts’ earlier direction that alternatives to listing be explored. “The Trusts had asked Tata Sons to look at other options, which has not been done,” he said, adding that the Trusts had therefore put forward an option for the Tata Sons board to consider.
According to Subedar, both the Sir Dorabji Tata Trust and Sir Ratan Tata Trust had passed resolutions authorising their chairmen to work together on options for Tata Sons. The mandate was reaffirmed in July 2025, when the Trusts communicated to the Tata Sons chairman Noel Tata’s authorisation to work on various alternatives.
Tata Trusts is therefore positioning the latest proposal as an implementation of an existing mandate to keep Tata Sons private. Subedar said there were resolutions predating the current dispute that provided a “clear mandate to remain unlisted”.
Tata Trusts, however, is not ruling out other restructuring options if the proposed merger does not work. Subedar said splitting Tata Sons into multiple entities was among the possibilities that could be examined, though the holding-cum-operating company structure was the option currently preferred by the Trusts.
The proposal will also be placed before the remaining trustees of Tata Trusts, while discussions with other stakeholders are expected to follow.
Subedar said the Rs 25,000-crore liquidity proposal from the Shapoorji Pallonji Group also remains on the table.
The proposed merger would not alter the shareholding of Tata Sons since both TESS and TCE are wholly owned subsidiaries. Tata Sons’ shares in the two companies would effectively be cancelled upon amalgamation, leaving the holding company’s ownership structure unchanged.
The Trusts intends to first pursue the corporate and regulatory route, with litigation being treated as a last resort. “When the system is giving you an option, why should you go for a legal remedy?” Subedar said, adding that the preference was to engage with regulators and work through the existing framework.
The key hurdle, however, will be regulatory acceptance. Tata Sons’ deadline to list has already passed and its earlier application to surrender its registration was rejected, raising the question of whether the RBI would accept a restructuring designed to alter the regulatory classification of the company.
The Trusts maintains that companies are entitled to restructure their businesses and that the proposed transaction would be undertaken through the prescribed corporate and regulatory processes.
If approved by the Tata Sons board and cleared by the RBI, the proposal would fundamentally alter the composition of Tata Sons without changing its ownership: substantial operating businesses would sit directly within the parent, allowing the Trusts to argue that Tata Sons is no longer principally a financial holding company and therefore need not be subject to the NBFC/CIC framework that triggered the listing requirement.