Tata Trusts proposes merger to keep Tata Sons private and avoid IPO

Tata Trusts has proposed merging Tata Electronics Systems Solutions and Tata Consulting Engineers with Tata Sons in a bid to remove the holding company from the Reserve Bank of India’s regulatory framework for non-banking financial companies and avoid a stock market listing.

The proposal, announced by Tata Trusts on Monday, 28 September, is intended to allow Tata Sons to remain privately held despite the central bank’s requirement that certain large non-banking financial companies list on a stock exchange.

Tata Trusts, which owns 66% of Tata Sons, said the merged entity would have operating revenue of ₹1.05 trillion, compared with income from financial assets of ₹40,072 crore, based on figures as of 31 March 2026.

The Trusts argue that the revised income composition would take Tata Sons outside the criteria used to classify a non-banking financial company (NBFC).

Investments in group companies would also account for less than 90% of the combined entity’s net assets, meaning it would no longer meet one of the conditions for classification as a core investment company (CIC), according to the proposal.

Tata Trusts said the merger would require approval from the Tata Sons board and a prior no-objection certificate from the RBI under its 2025 rules governing voluntary amalgamations involving NBFCs.
The restructured company would also need to surrender its CIC registration if the proposal is implemented.

The proposal follows a 17 September board meeting at which Tata Sons decided to proceed toward a public listing and approved another five-year term for Chairman N. Chandrasekaran.

Noel Tata, chairman of Tata Trusts, opposed Chandrasekaran’s reappointment and subsequently challenged the validity of the resolution. Tata Sons has maintained that the appointment was legally valid.

Tata Trusts has maintained that the holding company should remain privately held. In July 2025, the boards of the Sir Dorabji Tata Trust and Sir Ratan Tata Trust unanimously resolved to pursue measures to preserve Tata Sons’ unlisted status.

The Trusts said the proposed merger would restore an operating structure that Tata Sons used for much of its history. Before its separation into a subsidiary in 2004, Tata Consultancy Services Ltd operated as a division of Tata Sons.

The proposal weighed on listed Tata Group companies on Tuesday, 29 September, as investors reassessed the prospect of a Tata Sons listing. Tata Chemicals fell as much as 3.1%, while Tata Investment Corporation declined 2.1%. Both companies have attracted investor interest partly because of their exposure to Tata Sons.