Planned merger of TESS and TCE with Tata Sons would restore operating revenues while retaining the company’s unlisted private-company structure.
MUMBAI (India CSR): Tata Trusts, the 66% shareholders of Tata Sons Private Limited (TSPL), have proposed a strategic reorganisation that would merge Tata Electronics Systems Solutions Private Limited (TESS) and Tata Consulting Engineers (TCE) with Tata Sons. The Trusts said the resulting company would neither be a non-banking financial company (NBFC) nor a core investment company (CIC), once the plan receives the required approvals and is implemented.
The Trusts have written to the Tata Sons board to consider and approve the proposal, seek a prior no-objection certificate (NOC) from the Reserve Bank of India (RBI), and take the necessary steps for the merger. Tata Trusts and Tata Sons will engage with the RBI on all aspects of the proposed reorganisation, according to the September 28 statement.
Return to an operating company model
The plan would make Tata Sons both the Tata Group’s holding company and an entity with operating businesses and operating revenues. Tata Trusts said this is not a new pathway. For almost 80 years of Tata Sons’ nearly 100-year history, the company had operating businesses whose revenues helped fund newer ventures.
Tata Consultancy Services was a Tata Sons business division until 2004, when it was demerged into a separate subsidiary. Other operating businesses were also previously housed within Tata Sons. The proposed amalgamation would therefore return Tata Sons to an earlier operating model, while keeping the broader House of Tatas structure intact.
The Trusts said this would align with Tata Sons’ post-2004 RBI classification as a “non-banking, non-financial company”. Their argument is that the addition of two genuine operating, non-financial companies would materially alter the company’s income and asset profile.
Financial case behind the merger
Tata Trusts have used the proposed amalgamated entity’s March 31, 2026 position to make their regulatory case. The Trusts said operating revenue would be Rs. 105,043 crore, compared with Rs. 40,072 crore income from financial assets. Operating revenue would represent 64.3% of total income.
| Measure | Proposed amalgamated entity, as of March 31, 2026 |
|---|---|
| Operating revenues | ₹105,043 crore |
| Income from financial assets | ₹40,072 crore |
| Operating revenue as share of total income | 64.3% |
| Aggregate net assets | ₹200,158 crore |
| Investment in group companies | ₹177,120 crore |
| Group-company investments as share of net assets | Less than 90% (about 88.5%) |
On the stated figures, the Trusts said the entity would not meet the “principal business criteria” of an NBFC. It would also not meet the CIC conditions because investment in group companies would be below 90% of aggregate net assets. The merger is designed to change the balance between operating activity, financial-asset income and group investments.
RBI process and compliance
The reorganisation is not automatic. Tata Trusts said it must follow the Reserve Bank of India (Non-Banking Financial Companies – Voluntary Amalgamation) Directions, 2025, which require a prior RBI NOC for the merger of operating, non-financial companies with an NBFC.
If Tata Sons ceases to be a CIC after the amalgamation, it would have to surrender its certificate of registration. The board must first consider the proposal; the RBI would then examine the NOC application under the applicable directions. The September 28 statement sets out a proposed regulatory-compliance route. It does not say that the RBI has directed Tata Sons to list.
Retaining the unlisted structure
The plan is linked to Tata Trusts’ stated objective of retaining Tata Sons as an unlisted private company. In July 2025, the boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust unanimously resolved that all endeavours should be made to ensure that this status continues.
The Trusts say the distinctive more-than-century-old structure has enabled long-term strategic initiatives associated with nation-building and the welfare of disadvantaged and excluded communities. Their proposed route seeks to preserve that structure while addressing the regulatory classification of the holding company.
The 66% Trust shareholding gives the issue public-interest relevance. Income from the Tata Sons stake supports the charitable institutions’ work across healthcare, nutrition, education, water, sanitation and hygiene, livelihoods, social justice and inclusion, environment and other public-interest areas. The statement announces no change in any CSR allocation; the relevance lies in the ownership and governance framework behind a major philanthropic endowment.
Governance context
The reorganisation proposal follows a Tata Trusts statement of September 20 on the September 17 Tata Sons board meeting. The Trusts said the Articles of Association require every board decision to have affirmative support from at least a majority of directors nominated by the Tata Trusts, which own about 66% of Tata Sons. According to the Trusts, there are two Tata Trust nominee directors and a majority of two requires both to support a resolution. They said one nominee voted against the proposal concerning N. Chandrasekaran’s reappointment, so the required condition was not met. The Trusts argued that this meant there was no deadlock and a casting vote could not revive a resolution that failed the Articles’ separate approval requirement. This is the Trusts’ stated interpretation of the Articles and board process, rather than an independent legal determination. The reorganisation proposal is to be considered by the Tata Sons board.
What happens next
The immediate milestones are a Tata Sons board decision, an RBI NOC application, RBI consideration of the merger, and the eventual surrender of the CIC registration if the reorganisation is completed. Until then, Tata Sons remains under its existing structure and regulatory position.
The proposal is significant because it seeks to resolve the classification issue through a business reorganisation, not simply a change in ownership or capital-market status. If approved, Tata Sons would retain its role as the group’s holding company while gaining substantial operating revenues through TESS and TCE. Tata Trusts, established in 1892, described the plan as being in the interests of the Tata Group and its stakeholders, and as a permissible, compliant form of CIC reorganisation.
