Tata Sons intends to merge two key business units to change its operational structure. By increasing its core business income, the company aims to avoid being classified as a non-banking financial company by the RBI. This shift is designed to help the parent firm maintain its status as an unlisted holding company and preserve flexibility in managing its group entities.
Tata Sons Private Limited, the parent holding company of the Tata Group, is planning a major internal reorganization to alter how regulators classify its business. The proposal involves merging two entities—Tata Electronics Systems Solutions and Tata Consulting Engineers—directly into the parent company. This strategy is primarily aimed at moving the firm away from the regulatory framework of a Non-Banking Financial Company or a Core Investment Company, labels that come with strict oversight and liquidity requirements.
At the heart of the plan is a shift in the company’s revenue model. According to projections for the fiscal year ending March 31, 2026, the reorganized Tata Sons aims to generate ₹105,043 crore in operating revenue. By ensuring that this operating income accounts for more than 64 percent of its total earnings, the company expects to meet the criteria for an operating-cum-holding firm rather than a passive investment vehicle. This classification is crucial for the company, as current RBI rules for Core Investment Companies dictate strict limits on income from financial assets and the size of investments in group firms.
The proposed structure would cap investments in group companies at ₹177,120 crore. This amount is designed to be less than 90 percent of the entity’s projected net assets of ₹200,158 crore, which is a key threshold used to determine if a company qualifies as a Core Investment Company. By shifting back to an operating-cum-holding model—a structure the firm used before the 2004 demerger of Tata Consultancy Services—management intends to solidify its position as an active business entity.
This restructuring is subject to regulatory approval, as the company needs to secure a no-objection certificate from the Reserve Bank of India. The boards of the two major promoter trusts, Sir Dorabji Tata Trust and Sir Ratan Tata Trust, gave their approval to this plan in July 2025. If the RBI approves the proposal, Tata Sons will surrender its current Core Investment Company registration certificate. For investors, the main point of interest is the company's ability to maintain its unlisted status and organizational flexibility, which has historically allowed it to serve as a stable anchor for the diverse Tata Group, which includes everything from software to steel and aviation.