Tata Trusts Rift: What's Driving Conflict At India’s Most Storied Corporate House?—Explained
The internal conflict within Tata Trusts over board nominations and transparency is now drawing in the Central government amid fears of disruption to Tata Sons’ operations.
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.
Why Is The Government Stepping In?
A Tata Group delegation headed by Noel Tata is likely to hold discussions with ministers in New Delhi soon. The meeting is reportedly 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.
What Is The Dispute Within Tata Trusts?
As first reported by The Economic Times (ET), the rift among trustees became public following a Sept. 11 meeting of Tata Trusts, which revealed deep divisions a year after Ratan Tata’s death. Trustees remain split over a key control lever, which is the appointment of nominee directors to the Tata Sons board. They are also at odds over how much information from board deliberations should be shared with all trustees.
The conflict intensified after a stormy meeting in September, which led to former defence secretary Vijay Singh stepping down from the Tata Sons board.
Who Are The Key Figures Involved?
According to ET, apart from Tata Trusts chairman Noel Tata, the meeting with ministers is expected to include vice-chairman Venu Srinivasan, Tata Sons chairman N Chandrasekaran, and Tata Trusts trustee Darius Khambata.
ET had reported on Sept. 12 about the divisions. The report stated that Venu Srinivasan and Noel Tata opposed both Vijay Singh’s exit and the proposal to appoint Mehli Mistry to the Tata Sons board. On the other hand, Mistry’s nomination was supported by trustees Pramit Jhaveri, Darius Khambata, and Jehangir Jehangir.
What Regulatory Issue Adds To The Tension?
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, reported ET. 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.
Why It Matters?
The government is reportedly 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. During these discussions, Tata Group representatives are also expected to take up the matter of Tata Sons’ listing under the RBI’s regulations.
