By Dev Chatterjee
Tata Trusts, which hold a 66% stake in Tata Sons, have sought a five-year road map from the $150-billion holding company as the group grapples with a decline in the market value of its crown jewel, Tata Consultancy Services (TCS), and mounting losses at Tata Digital and Air India.
The plan, starting next financial year, is expected to outline capital allocation, cash-flow projections and investment priorities, said a person familiar with the development. The move is aimed at bringing sharper financial discipline and long-term visibility to the group’s expanding portfolio, particularly as it undertakes capital-intensive bets in aviation, digital commerce and new-age businesses.
Emails sent to Tata Trusts and Tata Sons on Tuesday did not elicit a response till press time.
The request comes amid a series of strategic discussions between the Trusts and Tata Sons. In February, the Trusts had asked Tata Sons, chaired by N Chandrasekaran, to work with the SP Group — an 18.4% stakeholder — to provide an exit option while retaining Tata Sons’ private status.
Discussions have taken place between the two sides, but no decision has been taken so far.
Regulatory Maneuvering
Tata Sons has earlier repaid all its debt and applied to the Reserve Bank of India (RBI) for declassification from the upper-layer non-banking financial company (NBFC) category. Under RBI regulations, such entities are typically required to list within a stipulated timeframe — a provision that had raised the prospect of Tata Sons going public. While the deadline has passed, the RBI is yet to take a call on the application.
By seeking declassification, Tata Sons is attempting to exit this regulatory bracket and avoid mandatory listing, thereby preserving its closely held structure. The Trusts wrote to Tata Sons in February reiterating their preference to remain private — the chairman’s formal view on the issue is still awaited — the source said.
Tata Trusts exercise significant influence over Tata Sons not only through their majority shareholding but also via governance rights embedded in the company’s articles, including the ability to veto key board resolutions and appointments. This gives the Trusts a decisive say in strategic direction, capital allocation and group-level decisions.
Capital Allocation Crossroads
The Trusts have also flagged concerns over sustained losses at Air India and Tata Digital — both of which require significant capital infusion — and are awaiting a response from Tata Sons on the path to profitability.
The five-year road map is part of a broader vision articulated by Trusts Chairman Noel Tata to align the group with India’s high-growth opportunities across sectors. As the group’s principal investment and incubation arm, Tata Sons is expected to continue seeding new businesses through internal accruals, while balancing returns from its mature, cash-generating assets.
However, a potential moderation in dividends from TCS — historically the group’s largest cash generator — could constrain internal funding, especially as capital is diverted to support turnaround efforts at Air India and scale up Tata Digital. This raises questions around capital allocation priorities and the sustainability of funding multiple large bets simultaneously.
“The Tata Group, given its scale, needs a long-term vision spanning the next 100-150 years. The five-year plan is a step in that direction,” the person cited above said.