SP Group Proposes 25,000 Crore Rupee Exit from Tata Sons as Its Future Comes Under Review

Key Facts

Noel Tata sent two letters to the Tata Sons board on October 29, asking it to place SP Group’s proposed exit and a company restructuring plan on the agenda for its next meeting on November 26, 2026. NDTV Profit reported that the letters, each three pages long, called for the proposals to be discussed and put to a vote. The SP exit proposal aims to provide the group’s shareholders with total consideration of 25,000 crore rupees. The other proposal concerns merging two wholly owned subsidiaries into Tata Sons. Both plans remain proposals, as the board has approved neither.

The draft resolution for SP’s exit calls for a selective reduction of Tata Sons’ capital and the cancellation of ordinary shares held by the group’s shareholders. The shares would be priced at fair market value, estimated by an investment banker or registered valuer, according to the draft resolution reported by NDTV Profit. The number of shares to be cancelled would be tied to achieving the targeted consideration of 25,000 crore rupees. The proposal does not say Tata Sons would buy the shares, but that they would be cancelled as part of the capital reduction. The reduction would require special approval from shareholders, approval from the National Company Law Tribunal, and other regulatory approvals.

The exit consideration is proposed to be paid in two or more instalments over 18 months. Potential funding sources include internal cash flows and the sale of stakes in listed companies. A Tata Trusts statement also raised the possibility of bringing investors into some of the group’s newer businesses. The statement also said some of those businesses could be put up for sale through sale offers. These remain potential funding options under the proposal, not approved or executed financing.

The restructuring plan proposes merging Tata Electronics Systems Solutions and Tata Consulting Engineers, both wholly owned subsidiaries, into Tata Sons. Noel Tata asked management to prepare a detailed assessment of the proposal before presenting it to the board. The requested assessment includes the value of the merger and its legal and regulatory implications, as well as financing arrangements and an implementation timetable. The proposed process would require prior approval from the Reserve Bank of India. Tata Trusts wrote to the Tata Sons board asking it to consider the plan and take steps to apply for approval, according to its statement.

Tata Trusts bases its proposal on the view that Tata Sons ran operating businesses and generated operating revenue during about 80 years of its nearly 100-year history. It cited Tata Consultancy Services, which was a division of Tata Sons before being spun off as a separate subsidiary in 2004. The two trusts said the entity resulting from the proposed merger would generate operating revenue of 1.05 trillion rupees for the year ended March 31, 2026. They estimated its income from financial assets at 40,072 crore rupees for the same period. On their calculations, operating revenue would account for 64.3% of the merged entity’s total income.

Tata Trusts said the merged entity would have net assets of 200,158 crore rupees on March 31, 2026, including investments of 177,120 crore rupees in group companies. It estimated those investments would account for less than 90% of net assets after the merger. On that basis, the trusts believe the entity would not meet the principal business criteria for a non-banking financial company or the requirements for a core investment company. That conclusion remains contingent on the proposed merger being carried out. The central bank had classified Tata Sons in the upper-layer category of non-banking financial companies and rejected its request to voluntarily surrender its registration, requiring it to comply with the category’s requirements.

The proposals come amid a dispute over listing requirements and Tata Sons’ regulatory status. On September 17, 2026, the company’s board approved a five-year extension of Chief Executive N. Chandrasekaran’s term and decided to pursue a listing in compliance with central bank directives, according to The Indian Express. The newspaper reported that 4 of the 6 board members supported his reappointment, Noel Tata opposed the decision, and Chandrasekaran did not vote. It also said the central bank rejected the company’s request on September 11 to voluntarily surrender its certificate of registration and asked it to comply with the rules for upper-layer non-banking financial companies. The newspaper said Tata Sons directs capital allocation and proposals for new ventures within the group, and that an ongoing dispute could affect the performance of its companies.

SP Group, which owns about 18.38% of Tata Sons, is seeking to monetise part of its stake, according to The Economic Times. The Financial Express reported that the group is open to a partial or full exit through a share buyback or a Tata Sons listing, and wants an early solution that would allow it to monetise the investment and reduce debt. The newspaper estimated the group’s total debt at about 55,000 to 60,000 crore rupees. It reported that the group completed a refinancing worth 21,500 crore rupees in July 2026, then repaid about 3,500 crore rupees to bondholders. It added that no repayments are due in October or November, giving the group some near-term breathing room as discussions over its stake continue.

The Financial Express reported that SP Group is not taking sides in the dispute between Tata Trusts and Tata Sons over Chandrasekaran’s reappointment and a potential listing. By contrast, the two steps Noel Tata has asked the board to consider concern financing SP’s exit and changing Tata Sons’ regulatory structure through a merger. Both still require board deliberations and a vote, according to NDTV Profit. Noel Tata is due to present the proposals at the November 26, 2026 meeting, seeking assessments of their implications, financing arrangements and implementation schedules. The next steps will depend on the board’s decision and the necessary regulatory and legal approvals.