Tata Trusts, which holds a majority stake in Tata Sons Pvt., has put forward a plan to combine the parent of India's largest business group with two unlisted affiliates: Tata Electronics Systems Solutions Pvt. and Tata Consulting Engineers. Reshaping the parent this way would turn Tata Sons into a holding-operating company rather than primarily a financial holding entity. According to the Trusts, the plan will need an RBI no‑objection letter and the Tata Sons board's approval, and it added that the Reserve Bank of India has also been provided the proposal.
Under RBI rules, Tata Sons falls into the Upper Layer Non-Bank Finance Company category, which carries a mandatory listing requirement. The Trusts argue that adding operating businesses, especially Tata Electronics which manufactures iPhones for Apple Inc., would place Tata Sons outside those listing triggers. If the revamp is cleared, the Trusts said Tata Sons would have operating revenue of 1.05 trillion rupees ($10.9 billion), "far in excess of its income from financial assets," meaning it "will not meet the principal business criteria" for a non-banking financial company and "also not meet the conditions applicable to a core investment company." Tata Sons' spokesperson did not provide comment right away when asked about the restructuring plan.
Noel Tata leads the charities that own 66% of Tata Sons, and his proposal lands amid an escalating power struggle with Tata Sons chairman Natarajan Chandrasekaran. At a tense Sept. 17 board meeting, directors reappointed Chandrasekaran and agreed to start preparing for a public float. Noel Tata opposed both decisions but was outvoted, rekindling debate over control of the parent of a group that produced $185 billion in annual revenue. Tensions of this sort could roil more than two dozen Tata-listed firms and weigh on marquee tech initiatives linked to Prime Minister Narendra Modi's advanced manufacturing goals.
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For the Trusts, a public listing would mean heavier regulatory and market scrutiny and could weaken their ability to fend off a hostile takeover. Bloomberg News reported earlier this month that after the RBI declined to grant an exemption, Noel Tata and his team weighed other options, including shrinking Tata Sons's balance sheet below the mandatory listing threshold or even splitting Tata Sons in two.
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