Government Intervenes In Tata Group Board Strife
The government is seeking to intervene in this boardroom battle as any distress in the Tata Group can have severe consequences for the broader corporate sector.
Representatives from Tata Group, led by Noel Tata, are set to meet with senior central ministers in New Delhi soon, according to two people in the know. The meeting is aimed at addressing the concerns around a board room struggle currently evolving at one of India's most storied corporate houses.
According to the people quoted above, the Tata Group leadership is currently split into two camps. The first camp consists of Noel Tata and those who back him, while the second camp is led by Mehli Mistry. While the Mistry camp believes that it has been kept in the dark about key strategic decisions at Tata Sons. The Tata camp, however, believes it has taken decisions which benefit all shareholders.
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 government is seeking to intervene in this boardroom battle as any distress in the Tata Group can have severe consequences for the broader corporate sector, the people quoted above said. As part of the discussions, Tata Group representatives will also likely discuss the mandatory listing of Tata Sons under Reserve Bank of India's guidelines.
Tata Trusts is a set of two philanthropic trusts. Noel Tata took over as chairman of Tata Trusts after Ratan Tata passed away a year ago.
Tata Trusts also owns 66% stake in Tata Sons, which is the primary investments arm of the group. Through Tata Sons, the group remains invested in a whole host of subsidiaries, joint ventures and associate companies.
The Tata Sons board is currently led by N Chandrasekaran, executive chairman. Noel Tata, Venu Srinivasan, Saurabh Agrawal, Anita Marangoly George act as directors.
According to the people quoted above, 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 RBI has stated that it is still considering the cancellation request, however a decision is yet to be announced.
The regulator's upper layer classification for Tata Sons in September 2022 meant that it would need to be mandatorily listed by September 2025. Even though the deadline to list has passed, no clarity on the future of the listing has been clarified yet.
