Nine years after Cyrus Mistry was unceremoniously removed as chairman of Tata Sons, and a year after the death of the patriarch, Ratan Tata, the shadow of both still looms over the storied group. Long held as an exemplar in corporate governance, the group is now a house in disorder. Sharp differences of opinion have emerged between the trustees of the Tata Trusts, which together hold roughly 66 per cent stake in Tata Sons, the group’s holding company. Considering the sheer breadth of sectors it operates in — from steel to auto, software, retail and semiconductors — another power struggle at the conglomerate could have far-reaching ramifications. Uncertainty at the top and a long-drawn-out conflict will impact decision-making, affecting not only the group’s businesses but the wider economy as well.
Reports suggest that the disagreements between the trustees arose over board appointments, access to sensitive information and the listing of Tata Sons. The latter also has implications for the Shapoorji Pallonji Group — the group holds an 18.37 per cent stake in Tata Sons — as a listing would help it unlock value, ease its debt burden. The RBI had classified Tata Sons as an upper-layer NBFC and given it a deadline of September 30, 2025 for listing. But, with the deadline passing — Tata Sons has moved to deregister as an NBFC — the central bank is still deliberating. Last Wednesday, RBI Governor Sanjay Malhotra is reported to have said that “any entity which has a registration, till it is not cancelled, will continue to do its business”. A few days ago, Tata Trusts chairman Noel Tata, vice chairman Venu Srinivasan, trustee Darius Khambata and Tata Sons chairman N Chandrasekaran met with Home Minister Amit Shah and Finance Minister Nirmala Sitharaman. While government intervention in the matter would raise a red flag, the fact that the trustees held a meeting with senior Union government ministers underlines the seriousness of the situation.
The absence of a towering figure, after the death of Ratan Tata, is being felt. Unlike the West, capitalism in India has tended to be more promoter-driven. For all their limitations, promoters do tend to bring stability to a business. But the history of the Indian corporate sector is also littered with examples of how, when strong promoters have passed away or did not have a clear succession line, the group either weakened or split. Under Ratan Tata’s stewardship, the Tatas sailed through storms, with an approach that prized achieving “consensus and unanimity on issues”, as Vijay Singh, who was on the board of Tata Sons, told this newspaper. For a group that has prided itself on its principled approach to business, and has long been held in high regard for its integrity, this saga must be quickly brought to an end. The Tata Trusts must put their house in order — it’s vital to their future.
