Tata Trusts Rift: What's Driving Conflict At India’s Most Storied Corporate House? — Explained

The Centre has stepped in to manage the turbulence faced by India’s most valuable business conglomerate, Tata Sons. This comes amid concerns that infighting at majority shareholder Tata Trusts could begin to impede the functioning of Tata Sons. The company’s majority shareholders, Tata Trusts, are locked in an internal conflict over the nomination of a director to the Tata Sons board. At the same time, the Reserve Bank of India’s (RBI) mandate requiring Tata Sons to list on the stock market has expired.

A Tata Group delegation headed by Noel Tata is likely to hold discussions with ministers in New Delhi soon, NDTV Profit has learnt from sources. The meeting is intended to calm the unease surrounding the tussle that has erupted at the very top of the group’s holding structure.

Those familiar with the situation said the group’s leadership has effectively split into two sides. While one is aligned with Noel Tata, the other is with Mehli Mistry. While the Mistry faction believes it has been excluded from several important strategic calls taken by Tata Sons, the opposing side maintains that every decision has been made with the interests of all shareholders in mind.

The strife has intensified following a stormy meeting at Tata Trusts last month, which directly led to former defence secretary Vijay Singh having to exit the Tata Sons board.

The timing of this boardroom strife coincides with a regulatory deadline. Sept. 30 marked three years since the RBI categorised Tata Sons as an “upper layer” non-banking financial company (NBFC), requiring it to list its shares within that period.

But in March 2024, Tata Sons applied to the RBI to deregister as an NBFC, seeking exemption from both the listing requirement and the accompanying regulatory framework. The regulator is yet to respond to this request.

According to the persons privy to the matter, Tata Sons does not intend to list as a public company. It has already stated publicly that it has applied for a cancellation of its certificate of registration as a core investment company. Once it is deregistered as a CIC, the mandatory listing requirement should go away. As part of this, Tata Sons has also paid a major chunk of its public debt and become a net zero debt company.

The government is looking to step in to help resolve the boardroom conflict, as any instability within the Tata Group could have huge repercussions for India’s wider corporate landscape, as per the sources whom NDTV Profit spoke to. During these discussions, Tata Group representatives are also expected to take up the matter of Tata Sons’ listing under the RBI’s regulations.