Tata Sons poised to become an NBFC

Tata Sons will become a non-banking finance company after the transfer of its infotech division, Tata Consultancy Services, to group company Orchid Print India Ltd.

Tata Sons owns the infotech business and has  investments to the order of Rs 40,000 crore (Rs 400 billion) in various group companies.

Once the infotech business was hived off, Tata Sons would only retain the investments and would, thus, become an NBFC, sources close to Tata Sons said.

However, the sources added that Tata Sons would not function as an NBFC, it would continue to act as a holding company for the group's investments. "It will be an NBFC only by definition," the sources added.

The sources said the company would then be governed by provisions of the Reserve Bank of India Act, 1934, instead of the Companies Act, 1956. The scheme is, however, subject to statutory approvals.

The TCS transfer plan is expected to take effect from April 1, 2003, with an initial public offer planned by the end of September 2003.

The transfer of TCS to Orchid Print India, which has a 90 per cent shareholding by Tata Sons, was approved by Tata Sons shareholders at an extraordinary general meeting on January 3.

The Bombay high court has asked the Tata Sons management to convene a meeting of all shareholders, and secured and unsecured creditors, including debenture-holders, for their consent to the proposal.