Venu Srinivasan, Vijay Singh write to fellow trustees, flag concerns over Tata Sons restructuring: Sources

Venu Srinivasan and Vijay Singh, vice chairmen of Tata Trusts and trustees of Sir Dorabji Tata Trust (SDTT), have raised questions over the process followed for a proposal seeking to merge Tata Electronics Support Services (TESS) and Tata Consulting Engineers (TCE) into Tata Sons, sources told CNBC-TV18.

In a letter to the trustees of Sir Ratan Tata Trust (SRTT) dated Wednesday, September 30, the two said they were not consulted before a September 28 communication was sent to the Tata Sons board seeking its approval for the proposed merger, according to people familiar with the matter. They also questioned whether the proposal had the backing of all SDTT trustees.

The letter also raised concerns over a press release issued in the name of Tata Trusts without the SDTT trustees' consent. On SRTT, the trustees questioned how a meeting could have been held to consider the proposal given the Maharashtra Charity Commissioner's May order deferring a scheduled meeting; SRTT has since faced restrictions on convening meetings amid the ongoing inquiry.

Questions over Trusts' role

Srinivasan and Singh also questioned the appropriateness of a shareholder asking the Tata Sons board to “approve” a business restructuring proposal. They flagged the possibility that direct involvement in Tata Sons' commercial decisions could have implications for the Trusts' charitable status, and said the proposal could have significant financial implications for Tata Sons, the Trusts and other stakeholders.

Singh had separately told the Maharashtra Charity Commissioner: “SDTT's substantial shareholding in Tata Sons cannot mean that the trust assumes the functions of a commercial enterprise or participates directly in Tata Sons' business affairs.”

The latest dispute comes after the Reserve Bank of India (RBI) on September 11 rejected Tata Sons' request for exemption from the core investment company framework, according to reports. The Tata Sons board subsequently moved towards exploring a public listing, while Tata Trusts said it had not agreed to a listing and that all available options should be examined.

What is the restructuring proposal?

On September 28, Tata Trusts said the proposed merger of TESS and TCE into Tata Sons

was aimed at creating an entity that would be neither a non-banking financial company (NBFC) nor a core investment company (CIC).

The Trusts said the reorganisation would allow Tata Sons to return to an earlier operating model, with its own businesses and revenues while continuing to function as the Tata Group's holding company. Tata Sons had operating revenues of ₹1.05 lakh crore in FY26, while income from financial assets stood at ₹40,072 crore, or 64.3% of total income.

The Trusts said the restructured entity would therefore not meet the principal-business criteria for an NBFC. It would also not meet the conditions for classification as a CIC, with investments in group companies accounting for less than 90% of aggregate net assets. The merger would require prior RBI approval.

Srinivasan and Singh have argued that decisions taken by the Trusts in 2025 should be reviewed in light of the RBI's September 11 communication, which came later. Tata Trusts, which collectively hold 66% of Tata Sons, and the Tata Sons board are already at odds over the company's regulatory status and proposed listing.