Whoever controls Sir Ratan Tata Trust and Sir Dorabji Tata Trust, and their dozen allied ones, wields power over Tata Sons, the parent company of the sprawling salt-to-software business empire. He or she—Ratan Tata is the current chairman of the two entities—lords over dozens of operational arms such as TCS, Tata Steel, Tata Motors, Tata Power, and Tata Chemicals. Who will be Ratan’s successor-heir as the next chairman of the trusts? Rather, who, among the current trustees, loyalists and outsiders, has the most likely chance to do so?
These questions are worth at least $275 billion, the combined market capitalisation of 17 listed Tata firms as of 12 p.m. on December 2, 2022. The recent changes in the rules that govern the trusts and the induction of new trustees hint that the succession strategy is underway. It’s a matter of a few years or months before we know whether a ‘Tata’, a non-family ‘Parsi’, or an outsider will head the two trusts. But herein lies the catch. Ratan Tata was pressured to decouple the posts of Chairman, Tata Sons, and Chairman, Tata Trusts. Now, the same person cannot occupy both.
Ratan Tata’s wealth inheritor will not be his business heir. This opens the doors for the continuation and future entry of a professional chairman at Tata Sons and other operational arms, even as a family member or loyalist closely monitors the workings of the trusts and the conglomerate through the trusts’ 66% stake in Tata Sons. This is exactly what Ratan Tata aimed to do when he inducted a relative, the late Cyrus Mistry, as the ‘professional’ chairman of Tata Sons. But they fell apart in a nasty manner, which led to ugly legal and media battles.
Luckily for Ratan Tata, the Supreme Court order in the Tata-Mistry case made his position, and that of the trusts, stronger. The apex court ruled that the trusts and their chairman have the right to interfere in the workings of Tata Sons. Through the one-third of directors nominated on the board of Tata Sons, the trusts can influence crucial decisions such as five-year and annual strategic plans, future investments, and the size of the debt. They possess affirmative rights—unless the majority of trust-appointed directors give its nod, an issue taken up by the board dies a natural death. It implies that the trusts can do similar things with the operational arms, whose fate is decided by Tata Sons.
The war with Cyrus came as a rude shock to Ratan Tata after he stepped down as Tata Sons’ chairman, sidelined his half-brother, Noel, and chose Mistry as his successor. Now, the family is back. Insiders are now important in Ratan’s scheme of things. Noel is a trustee in Sir Ratan Tata Trust and Sir Dorabji Tata Trust, which together own over 50% in Tata Sons. He is a trustee in two allied trusts, Bai Hirabai JN Tata Navsari Charitable Institution and JN Tata Endowment.
More than a month ago, in a move that seemed critical to the succession issue, Noel’s three children, daughters Leah and Maya, and son Neville, were inducted as trustees of Tata Medical Center Trust, which manages a cancer-care hospital in Kolkata.
The entry of young blood—the children are in their thirties—and media reports that the trio will work under Ratan’s supervision, indicated the latter’s intentions to pass on the baton to one or three of the kids in the distant future. (Recently, another owner of an Indian conglomerate, Mukesh Ambani, anointed his two sons and daughter as successors.)
Then there is another, more ‘hidden out of sight’ Tata. He isn’t directly in the picture but can play a larger-than-life role in succession planning. A media report states that he “lives a quiet, reticent life in a humble flat in Colaba (Mumbai)”. Apart from being a shareholder of Tata Sons and other operational arms, Jimmy Tata, Ratan’s real brother, is a trustee in Sir Ratan Tata Trust and allied ones like Sarvajanik Seva Trust and Bai Hirabai JN Tata Navsari Charitable Institution. He doesn’t own a mobile but knows the pulse at Bombay House, the Tata Group’s headquarters. During the Mistry-Ratan war, he had a thick file that contained “letters to the trustees of Sir Ratan Tata Trust and the board of Tata Sons” about several issues.
Never underestimate a ‘Mistry’. After Cyrus’ rise and fall—the ascent of Mehli Mistry, whose mother is Cyrus’ mother’s sister—within Tata Trusts seems phenomenal. He is a trustee in Sir Ratan Tata Trust and Sir Dorabji Tata Trust. Crucially, he is Ratan’s close friend. Before his untimely death, Cyrus accused Mehli’s companies of receiving favours from the Tata Group. The Supreme Court dismissed this allegation. Ratan is likely to listen to Mehli’s advice.
Two friends, a civil servant and an entrepreneur, are part of Ratan’s coterie. Vijay Singh, the former defence secretary, and Venu Srinivasan, who owns the TVS Group, are designated as vice-chairman of the two main Tata Trusts and several allied ones. Both are directors in Tata Sons. In 2021–22, Venu Srinivasan held membership in crucial groups in the parent holding company, which included Group Risk Management Committee, Audit Committee, and Nomination and Remuneration Committee.
After the Tata-Mistry public spat, Ratan wishes to part-professionalise the group and trusts. In 2020, he appointed Srinath Narasimhan as Tata Trusts’ first CEO.
Srinath retired on October 30, 2022. Recent reports suggest that the shortlist of possible names includes Siddharth Sharma, Tata Sons’ group chief sustainability officer, and Sukaran Singh, CEO, Tata Advanced Systems. Ratan, adds one of the reports, will take the final call. Given the decoupling between Tata Sons and the trusts, N Chandrasekaran, Executive Chairman, Tata Sons, will not get the Tata Trusts’ chairmanship unless he exits the parent company.
But what happens when he is gone from the group? Will Tata Sons’ new chairman be a family man, who doesn’t control the trusts, or a rank professional outsider? After Ratan, who will be Tata Trusts’ chairman?
Alam Srinivas
Independent journalist and author