Tata Sons Merger Plan: How Tata Trusts Aims to Avoid RBI Listing

Tata Trusts has proposed merging Tata Electronics Systems Solutions Pvt. Ltd. (TESS) and Tata Consulting Engineers (TCE) with Tata Sons in a restructuring plan that could change the holding company's regulatory status. Tata Trusts owns 65.9% of Tata Sons.

The proposal is aimed at taking Tata Sons out of the Core Investment Company (CIC) framework. If completed, the combined entity would have Rs 1,05,043 crore in revenue and Rs 2,00,158 crore in net assets.

The plan comes after the Reserve Bank of India rejected Tata Sons' earlier request to surrender its certificate of registration as a CIC. Tata Sons was classified as an Upper Layer NBFC in September 2022 and was directed to become a public company.

How the Tata Sons merger plan works

Tata Trusts has proposed bringing TESS and TCE into Tata Sons. The calculation behind the proposal is based on the combined company's asset mix after the merger.

A company falls under the CIC definition when at least 90% of its assets are invested in shares, bonds or loans of group companies. Under the proposed structure, investments in group companies would total Rs 1,77,120 crore, compared with total net assets of Rs 2,00,158 crore.

That means group company investments would account for less than 90% of total net assets. Tata Trusts' position is that Tata Sons would therefore no longer qualify as a CIC or an NBFC after the reorganisation.

Particulars	Details
Tata Trusts' holding in Tata Sons	65.9%
Combined revenue after merger	Rs 1,05,043 crore
Combined net assets	Rs 2,00,158 crore
Investments in group companies	Rs 1,77,120 crore
Tata Sons standalone revenue, FY26	Rs 42,366.5 crore
Tata Sons standalone profit, FY26	Rs 31,961 crore

Tata Sons reported standalone revenue of Rs 42,366.5 crore and profit of Rs 31,961 crore for the year ended March 2026.

Why Tata Trusts is proposing the restructuring

The immediate issue is Tata Sons' regulatory status. The RBI has treated Tata Sons as an Upper Layer NBFC and had asked the company to become public by September 2025.

Tata Sons had earlier sought to surrender its registration as a CIC. The RBI rejected that request in a letter dated 11 September, telling Tata Sons to take steps to comply with the rules applicable to Upper Layer NBFCs.

Tata Trusts said that if the proposed reorganisation is completed, Tata Sons would cease to be a CIC and would therefore need to surrender its certificate of registration.

The proposed route is also connected to Tata Sons' earlier decision to remain unlisted. The Tata Sons board passed a unanimous resolution in 2024 to keep the company private. Farokh Subedar, an advisor to Tata Trusts, said the board has not withdrawn that resolution.

The issue has previously been discussed in the context of a possible Tata Sons IPO and RBI directive, which could have wider implications for Tata group companies and the structure of the group.

Tata Sons board approval is still needed

The proposal is not yet complete. Tata Sons' board must first approve the merger plan.

This is significant because the board's recent position has differed from Tata Trusts' approach to the company's future. On 17 September, the board opposed Tata Trusts chair Noel Tata's decision not to extend N. Chandrasekaran's term for a third time from February next year. The board also agreed to follow the RBI's direction to become a public company.

The board includes two Tata Trusts nominees, Noel Tata and Venu Srinivasan. The differences between the Trusts and the Tata Sons board have added a corporate governance dimension to the regulatory issue.

The earlier discussion around Tata stocks and Tata Sons also shows why decisions involving the holding company can attract attention across the wider Tata group.

What the RBI has said

The RBI's position remains an important part of the restructuring process. In its 11 September letter to Tata Sons chief financial officer Saurabh Agarwal, the central bank rejected the request for voluntary surrender of the certificate of registration.

The RBI also told Tata Sons to take the necessary steps to comply with the rules applicable to Upper Layer NBFCs. The source does not state that the regulator has approved the proposed merger or the removal of Tata Sons from the Upper Layer NBFC category.

This leaves a second regulatory question after the board approval issue. Even if Tata Sons accepts the Tata Trusts proposal, the RBI would still need to accept the resulting regulatory treatment.

Tata Sons listing order has no new deadline yet

The RBI first classified Tata Sons as an Upper Layer NBFC in September 2022 and directed it to become public by September 2025.

The source states that the RBI has not so far set a new deadline for Tata Sons to comply with the public listing direction. This means the regulatory position remains active while Tata Trusts pursues a different route through the proposed restructuring.

For Tata Sons, the next steps therefore depend on two decisions. The first is whether the board approves the Tata Trusts proposal. The second is whether the RBI accepts the resulting change in Tata Sons' regulatory classification.

What happens next

The immediate focus will be on the Tata Sons board's response to the merger proposal and the RBI's view of the proposed structure.

The proposed combination would change the asset mix of Tata Sons enough, according to Tata Trusts' calculations, to bring group company investments below the 90% threshold used in the CIC definition. The proposal is therefore built around a regulatory change in Tata Sons' status rather than a conventional public listing process.

The final outcome will depend on whether the restructuring receives the required board approval and whether the RBI accepts that Tata Sons no longer falls within the relevant NBFC and CIC categories.

Frequently asked questions

What is Tata Trusts proposing for Tata Sons?

Tata Trusts is proposing to merge Tata Electronics Systems Solutions and Tata Consulting Engineers with Tata Sons. The plan is intended to change Tata Sons' asset mix so that group company investments fall below the 90% threshold used in the CIC definition.

What percentage of Tata Sons does Tata Trusts own?

Tata Trusts owns 65.9% of Tata Sons. The majority shareholder has proposed the restructuring as Tata Sons faces RBI requirements linked to its Upper Layer NBFC status.

What would Tata Sons' revenue be after the proposed merger?

The combined entity would have revenue of Rs 1,05,043 crore after the proposed merger of TESS and TCE with Tata Sons. Its combined net assets would be Rs 2,00,158 crore.

Why does Tata Trusts want Tata Sons to stop being a CIC?

Tata Trusts says the proposed restructuring would take Tata Sons below the 90% asset investment threshold used to define a CIC. If Tata Sons ceases to qualify as a CIC and an NBFC, it would need to surrender its certificate of registration.

Has the RBI approved the Tata Sons restructuring?

No approval is stated in the supplied material. The RBI rejected Tata Sons' earlier request to voluntarily surrender its certificate of registration, and it is still unclear whether the regulator would accept the proposed restructuring.

When was Tata Sons classified as an Upper Layer NBFC?

Tata Sons was classified as an Upper Layer NBFC by the RBI in September 2022. The RBI had asked Tata Sons to become a public company by September 2025, but the supplied material says no new compliance deadline has been set so far.