Tata Trusts has a plan B for Tata Sons to avoid D-St

Mumbai: Tata Trusts has proposed merging two operating companies with Tata Sons, aiming to alter its regulatory status and maintain its unlisted private entity classification. The plan was conveyed to the Tata Sons board on Monday, according to Tata Trusts. The Trusts hold a 66% stake in Tata Sons. The reorganization would merge Tata Electronics Systems Solutions and Tata Consulting Engineers with Tata Sons, the Trusts said.

This move would result in a company with ample operating income to avoid being categorized as a non-banking finance company (NBFC) and a reduced proportion of investments in group companies, thus avoiding the definition of a core investment company (CIC).

The Trusts argue that this restructuring would preserve Tata Sons' unlisted status and its distinctive organizational model, which has focused on long-term strategic initiatives for the nation's welfare. However, the proposal requires approval from the Reserve Bank of India (RBI) under its voluntary amalgamation framework for NBFCs.