Tata Trusts has proposed merging Tata Electronics Systems Solutions and Tata Consulting Engineers with Tata Sons as part of a strategic reorganisation that it says could take the group holding company outside the Reserve Bank of India’s regulatory framework for non-banking financial companies and core investment companies. The proposal is aimed at retaining Tata Sons as an unlisted private company while restoring an operating-business model within the holding company.
Mumbai, Sept 2026 : Tata Trusts, which holds about 66 per cent of Tata Sons Pvt Ltd (TSPL), has proposed merging two operating companies — Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) — with Tata Sons as part of a strategic reorganisation designed to change the regulatory status of the group’s holding company.
The proposal comes amid the ongoing issue of Tata Sons’ regulatory classification and the requirement applicable to certain large NBFCs and core investment companies (CICs) to list their shares. Tata Trusts has maintained that Tata Sons should remain an unlisted private company and has been exploring alternatives to a public listing.
According to a statement issued by Tata Trusts on Monday, the proposed restructuring would take Tata Sons back towards an operating model that it followed for much of its history, with the company generating operating revenues alongside its role as the holding company of the Tata Group.
The Trusts said the proposed reorganisation was not a new approach for Tata Sons, which has had operating businesses and operating revenues for most of its roughly 100-year existence. These businesses, it said, helped finance the development of newer ventures within the group.
Tata Trusts cited Tata Consultancy Services (TCS) as an example of the earlier structure. Until 2004, TCS operated as a business division of Tata Sons before being demerged into a separate subsidiary. The Trusts said other operating businesses had also followed similar arrangements.
Under the proposed restructuring, Tata Sons would therefore once again have its own operating businesses and revenues while continuing to function as the principal holding company for the Tata Group. Tata Trusts said this would also be consistent with an earlier classification by the Reserve Bank of India under which Tata Sons was treated as a “non-banking, non-financial company”.
The Trusts said the proposed amalgamated entity would have a significantly larger operating-revenue base. Based on figures as of March 31, 2026, the combined entity would have operating revenues of Rs 1,05,043 crore, according to the statement.
Tata Trusts said income from financial assets would amount to Rs 40,072 crore and that operating revenues would therefore constitute 64.3 per cent of the total income of the amalgamated entity. On this basis, the Trusts contend that the resultant entity would not meet the “principal business criteria” applicable to an NBFC.
The Trusts also said the combined entity would not meet the conditions applicable to a CIC. It cited net assets of Rs 2,00,158 crore, of which investments in group companies would amount to Rs 1,77,120 crore. According to the Trusts, this would represent less than 90 per cent of the aggregate net assets of the resultant entity.
Tata Trusts said the proposed merger would have to comply with applicable RBI regulations. Since the transaction involves the amalgamation of operating, non-financial companies such as TESS and TCE with Tata Sons, which has been treated as an NBFC, the process would have to follow the RBI’s Non-Banking Financial Companies — Voluntary Amalgamation Directions, 2025.
The process would include obtaining a prior no-objection certificate from the RBI. Tata Trusts further said that if Tata Sons ceased to qualify as a CIC after the restructuring, it would have to surrender its certificate of registration.
The Trusts said the proposed reorganisation and the related compliance plan were, in their view, in the interests of Tata Group and its stakeholders and represented a regulatory-permissible route for restructuring the company.
Tata Trusts has accordingly written to the Tata Sons board asking it to consider and approve the proposal and take the necessary steps, including approaching the RBI for the required no-objection certificate. The Trusts said they would engage with the central bank, along with Tata Sons, on all aspects of the proposed restructuring.
The proposal also follows a series of recent developments over the future structure of Tata Sons. Tata Trusts said the proposed steps were consistent with unanimous resolutions passed by the Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025, under which efforts were to be made to retain Tata Sons as an unlisted private company.
Tata Trusts has publicly reiterated that position in recent weeks. On September 17, the Trusts said they had not agreed to a listing of Tata Sons and that all available options should be explored following communication from the RBI. They also pointed to an earlier Tata Sons board decision in March 2024 to remain unlisted.
The Trusts said the proposed restructuring would also preserve what it described as the Tata Group’s distinctive organisational structure, which has existed for more than a century. It said the structure has historically allowed the group to pursue long-term initiatives and support activities linked to nation-building and the welfare of disadvantaged and excluded communities.
The proposal is the latest step in a broader debate over Tata Sons’ future regulatory and ownership structure. The company’s regulatory status, its possible listing and the role of Tata Trusts as its majority shareholder have become significant issues in recent weeks.
The merger proposal, however, remains subject to consideration by the Tata Sons board and the applicable regulatory process, including the RBI’s approval requirements. No final restructuring has been completed through the proposal announced by Tata Trusts on Monday.
