Tata Trusts on Monday proposed merging two operating companies into Tata Sons, in a fresh bid to take the group’s holding company out of the core investment company (CIC) category. The majority owner of Tata Sons believes the move could help the company comply with the Reserve Bank of India’s (RBI) direction without having to list it on the stock exchanges.
Tata Trusts, which owns 65.9% of Tata Sons, proposed to merge Tata Electronics Systems Solutions Pvt Ltd (Tess) and Tata Consulting Engineers (TCE) with Tata Sons. The merger will help the company skirt the tags of both a CIC and a non-banking financial company (NBFC), the philanthropic entities said.
This is because the combined company will have net assets of ₹2,00,158 crore, with investments in group firms totalling ₹1,77,120 crore, which is less than 90% of the total net assets. Moreover, the combined company will have operating revenues of ₹105,043 crore, far more than its income from of ₹40,072 crore from financial assets. Tata Sons had posted a standalone revenue of ₹42,366.5 crore and profit of ₹31,961 crore for the year ended March 2026.
RBI classifies companies with more than 50% of their income from financial assets as NBFCs. Further, it defines a CIC as an NBFC that has at least 90% of its assets invested in shares, bonds, or loans within group firms.
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For context, Tess is an electronics manufacturing subsidiary of Tata Electronics that manufactures iPhones in Karnataka. The unit was acquired from Taiwan’s Wistron in 2024. TCE is a privately-held engineering and project management consultancy firm handling large infrastructure projects.
The restructuring proposal offers Tata Trusts a new route to keep Tata Sons private after the RBI had on 11 September rejected the company’s earlier application to surrender its CIC registration.
Tata Trusts on Monday sent this restructuring proposal to Tata Sons chairman N. Chandrasekaran and to the RBI.
“It is our expectation that once this step is sort of taken to the RBI, and it gets found to be satisfactory, we will neither be an NFC nor a CIC. And therefore, none of these guidelines will apply, and we will be an investment and operating company like several other conglomerates operate in India,” said Farokh Subedar, 71, a group veteran who has worked with four Tata Sons chairmen and is now an advisor to Tata Trusts.
The group veteran was briefing the media at the Tata Trusts office in one of Mumbai’s oldest business districts of Cuffe Parade.
“The Tata Sons board has already passed a resolution to remain unlisted. They have not reversed that resolution,” Subedar said.
In the summer of 2024, the Tata Sons board had passed a unanimous resolution to keep the company private.
If the restructuring passes muster with both the Tata Sons board and the regulator, it could fundamentally alter the regulatory status of the holding company, and remove the trigger for an IPO.
Tata Trusts calls it a return of the company to its original state. “TSPL (Tata Sons) has, for almost 80 years out of its 100-year existence, always had operating businesses and operating revenues,” the Trusts said in its press release, highlighting that Tata Consultancy Services Ltd was a division of Tata Sons until 2004.
Two practical challenges still confront the philanthropic entity as it jostles for control with the Tata Sons board that has indicated its willingness to go public.
First, the Tata Sons board must approve the Trusts’ proposal. The proposal comes less than a fortnight after the Tata Sons board on 17 September decided to comply with RBI’s regulations, despite Tata Trusts chairman Noel Tata reiterating the Trusts’ position that the holding firm should remain private.
Second, even if the board of Tata Sons agrees to the majority shareholder’s plan, it is unclear whether the RBI will approve removing the group’s holding company from the upper-layer NBFC category, for which a public listing is mandatory.
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Legal experts say the proposal complies with RBI guidelines. “In sophisticated conglomerates, transitioning from a pure holding structure into an operating-cum-investment entity is a legally recognized route to reshape regulatory classification, though it will naturally be examined closely by the central bank under its scale-based governance principles,” said Ankita Singh, managing partner at Sarvaank Associates, a boutique law firm.