New Delhi, India – An unprecedented power struggle has erupted at the top of one of India’s largest conglomerates, pitting the board of its holding company Tata Sons against its majority shareholder Tata Trusts.
Last week, Tata Sons extended Chairman N Chandrasekaran’s term and said it would consider publicly listing the holding company, flying in the face of the family charity that controls the ۱۵۸-year-old Tata Group.
Extending Chandrasekaran’s chairmanship and taking Tata public is at the heart of the family-linked feud – and its outcome will not be limited merely to the group’s headquarters at Bombay House.
Collectively, listed Tata companies have a market capitalisation of $۲۷۷bn and influence over ۱۷.۷ million retail shareholders apart from pension funds, insurers and mutual funds, investment advisory firm InGovern said.
So what’s behind the bitter brawl inside one of the corporate world’s most consequential boardrooms?
How big is the Tata Group?
The Tata Group business conglomerate spans industries from information technology and automobiles to steel, power, aviation, chemicals and consumer goods.
It has ۲۶ publicly listed companies, including TCS and Tata Motors. They have a combined market capitalisation of $۲۷۷bn and operate across more than ۱۰۰ countries. Tata Sons serves as the group’s principal holding and investment company.
The group’s humble beginnings go back more than ۱۵۰ years when Nusserwanji Tata, born into a Parsi priest’s family in Gujarat, moved to Mumbai (then Bombay) in the mid-۱۹th century and entered the trading business.
He later expanded into trade with China before his son Jamsetji Tata built the business into an industrial group, riding on deals in cotton and opium. Opium was then banned by China’s Qing rulers, and Nusserwanji found a way to smuggle it.
The conglomerate’s real breakthrough came when the United States Civil War broke out in ۱۸۶۱. The disruption to US cotton supplies sent Indian cotton prices soaring and transformed the fortunes of Bombay’s merchants, including the Tatas.
Their businesses turned into an empire over coming generations. Jamsetji Tata died in ۱۹۰۴, and his sons Dorabji and Ratanji Tata carried his businesses forward. The family’s charitable trusts became major shareholders of Tata Sons.
JRD Tata, who became chairman in ۱۹۳۸, transformed the group into a diversified industrial enterprise, expanding into aviation, including India’s flagship carrier, Air India; chemicals; and engineering. In ۱۹۹۱, Ratan Tata succeeded JRD, taking over as India began economic liberalisation.
Under Ratan, the Tata Group consolidated a sprawling group under a more unified corporate identity and pushed it onto the global stage with landmark acquisitions, including Tetley, Corus and Jaguar Land Rover. Tata is now pushing into the next generation of global manufacturing with a major iPhone assembly operation in India and a semiconductor fabrication and chip-assembly business.
Ratan was the chairman of both Tata Sons and its majority stakeholder, Tata Trusts, and remained a bridge between the two. After he died in ۲۰۲۴, a widening schism gradually became apparent.
Tata Trusts is an umbrella of family-linked charities that own ۶۶ percent of Tata Sons.
So what’s Tata v Tata about?
The face-off was triggered on September ۱۷ when Tata Sons reappointed Chandrasekaran as its chairman over the Tata Trusts’ nominee on the board, Noel Tata, in a ۴-to-۱ vote.
Noel Tata is the sitting chairman of Tata Trusts and the only family-linked senior executive sitting in the top echelons of Tata Sons today. Noel is the half-brother of Ratan Tata and became Tata Trusts’ chairman after Ratan’s death in ۲۰۲۴.
But the divisions between the company and majority shareholder run deeper – and include questions of taking Tata Sons public and providing a planned exit to Tata Sons’ second-largest shareholder, Shapoorji Pallonji.
Chandrasekaran’s reappointment
Last month, Chandrasekaran said he would not seek another term as chairman after February ۲۰۲۷. But Tata Group said in a statement the board asked him to reconsider the group’s “larger interests”, a request that he accepted.
The ۶۸-year-old Noel Tata called the reappointment “illegal” under Tata Sons’ articles of association, adding in a statement that both trust nominees on the board were required to vote in coordination, whereas only Noel Tata voted against. The other trust nominee, Venu Srinivasan, voted in favour of Chandrasekaran’s reappointment.
This matter is now expected to be decided by the courts.
Listing of Tata Sons
India’s central bank, the Reserve Bank of India (RBI), requires companies with assets exceeding $۱۰.۴۵bn to publicly list.
Tata Sons tried to skirt the requirements by deregistering as a nonbank finance company. But days before its board meeting this month, the RBI rejected the company’s request, bringing it closer to a public listing.
Tata’s structure is unusual because the holding company at the very top of the empire is at the moment not itself subject to public-market scrutiny, even though many of the companies beneath it are.
At the board meeting, Tata Sons said it would take steps to comply with the RBI’s requirements. But Noel Tata opposed the move, arguing that listing would alter the character of a group that also supports extensive philanthropic activities.
Shapoorji Pallonji’s proposed exit
The Shapoorji Pallonji Group holds an ۱۸.۴ percent stake in Tata Sons and is its second-largest shareholder.
The infrastructure and construction conglomerate is knee-deep in debt and is seeking to monetise its shareholding in Tata Sons.
Tata Trusts said Noel Tata tabled a plan to sell a part of the Shapoorji Pallonji Group’s stake in the holding company worth $۲.۶۱bn. Tata Sons has not yet commented on the plan.
Shapoor Mistry, the group’s patriarch, is also Noel Tata’s brother-in-law. The Shapoorji Pallonji Group backs Tata Sons going public and is opposed to Noel’s position.
What does the dispute mean for India’s economy?
The central question in the showdown that is captivating millions of Indians involves the public listing of Tata Sons.
Noel Tata said in a statement that the Tata Group “was conceived as a national service carried on through business”. The unusual privately owned structure of Tata Sons, Noel argued, has allowed the company to remain in the country’s service and “act repeatedly in ways that a purely commercial calculus would not have supported”.
“A listing will destroy its character and strike at the heart of this principle,” Tata Trusts has argued.
However, Santosh Mehrotra, an Indian development economist, told Al Jazeera that Tata Sons needs to be listed publicly, no matter what. “There is a law for everyone, and Tata cannot be an exception to that,” he said.
“We are at a stage as a country when top business houses cannot be allowed to continue to behave in whatever manner they have managed to behave in over the last ۱۰۰ years,” Mehrotra said.
Mehrotra argued that over the past decade under Prime Minister Narendra Modi, India’s top business houses, including the empires of billionaires Gauran Adani and Mukesh Ambani, “have been permitted by the government to grow the concentration of industries across sectors in a historically unprecedented manner”.
“India’s biggest business houses have grown horizontally, capturing all sectors, which have come at the cost of people below them in the pyramid,” Mehrotra said.
“That means that the core inflation is being driven essentially by these handful of businesses because their horizontal and vertical control gives them the ability to mock up prices that are unprecedented in our economy’s history while their profits mount,” he said.
Mehrotra said that while the Tata boardroom drama could be captivating for some, “ordinary Indians’ concerns are rooted in regulating the unchecked growth [of conglomerates] backed by the government.”
InGovern, a governance advisory firm, said in a note that a holding company like Tata Sons that exercises “influence over businesses of such scale cannot reasonably remain outside the governance and transparency expectations increasingly associated with systemically important financial and industrial conglomerates”.
What’s the future of Tata Group?
That is slated to be decided in the courtroom now.
Both sides have lawyered up with some of India’s top legal eagles. Harish Salve, a former solicitor general of India, is leading the Tata Sons legal team while Abhishek Singhvi, a member of parliament from the opposition Indian National Congress party, is representing Tata Trusts.
The Tata Group is no stranger to boardroom tussles and dramas. After Ratan Tata stepped down from the Tata Sons chairmanship in December ۲۰۱۲, Cyrus Mistry was appointed to the top job, becoming the first person from outside the Tata family to lead Tata Sons in decades.
However, differences grew between Mistry and Ratan Tata, who was then still heading Tata Trusts, over strategy, governance and capital allocation. Tata Sons pulled off a stunning coup, removing Mistry as the chairman in October ۲۰۱۶.
Cyrus is the younger brother of Shapoor Mistry and also the brother-in-law of Noel Tata. In bitterly fought legal battles, Cyrus eventually lost his case in ۲۰۲۱ before the Supreme Court. At that time, lawyers Salve and Singhvi found themselves on the same side, fighting for Tata Sons against Mistry.
That judgement upheld “that the affirmative voting rights given to Tata Trusts-nominated directors are legal, valid and a globally accepted corporate norm for majority-trust-held institutions”, said Nitin Potdar, a senior company lawyer based in Mumbai.
Currently, the Tata Sons board has two nominated members from Tata Trusts: Noel Tata and Venu Srinivasan. While Noel Tata opposed the reinstatement of Chandrasekaran as the chairman of the holding company, Srinivasan voted in favour.
“Even if the two Tata Trusts nominees give their votes differently, that does not give rise to any [legal] deadlock,” Potdar told Al Jazeera.
Singhvi, who will now represent Noel Tata, wrote in an X post that his reaction to the tussle “is one of sadness and regret that these issues could not be solved amicably”.
“But in the ultimate analysis, fundamental rights of shareholder-owners cannot be nullified in the manner in which they have been,” he wrote. “To stultify shareholder ownership rights would spell doomsday for corporate governance across hundreds of Indian companies.”
“Rupturing the over hundred years of Tata Trust and Tata Sons established hyphenated relationship and divorcing one from the other seems unthinkable,” Singhvi said.
