Boardroom fractures at Tata signal a deeper governance reckoning

After the death of Dhirubhai Ambani, the Reliance group saw an acrimonious split between his sons. In the Murugappa group, the death of MV Murugappan in 2017 was followed by a bitter family feud after his eldest daughter Valli Arunachalam sought a board seat in Ambadi Investments Ltd, the holding company.

Are we now witnessing a similar moment at Bombay House, the 157-year-old nerve centre of the Tata empire? Recent conflicts involving the trusts that control the group indicate this isn’t just a routine transition period. They reflect deeper structural challenges in managing one of India’s largest business empires.

Board games

This week, Tata Trusts chair Noel Tata’s informal suggestion to restructure Tata Sons’ leadership by creating separate CEO and deputy CEO roles alongside the chairman was nixed after trustees resisted. The current sole-leadership model under Natarajan Chandrasekaran is set to continue. The trustees favored extending Chandrasekaran’s tenure for a third term when his current five-year term expires in 2027. That came after the resignation of Vijay Singh from the board of Tata Sons. He had been in the role since 2012 and a trustee of Tata Trusts since 2018. The dispute over his reappointment exposed fundamental differences over the power to appoint nominee directors to the Tata Sons board.

These developments highlight deeper divisions over control of the conglomerate, revealing how the trust-based governance structure that once provided stability is now becoming a source of institutional friction as different factions jostle for influence in the post-Ratan Tata era.

Bad timing

The internal challenges come at an inopportune time. The storied group stands at a crossroads, navigating a mandated public listing of its holding company, possible ownership structure changes, and tech-driven disruption in sectors such as electric vehicles (EVs) and information technology, and strategic bets in semiconductors and digital ventures. Leadership clarity is the need of the hour.

Noel Tata’s idea of putting have a CEO and a deputy CEO at Tata Sons has merit. The holding company of such a sprawling conglomerate, with investments in legacy and new-age businesses, could surely use more managerial heft at the top.

Also, unlike his predecessors JRD Tata and Ratan Tata, Noel has three children, all of whom could well be in line to succeed him. Leah and Maya Tata are trustees of smaller Tata trusts and hold management positions in Tata companies, with Leah working at Indian Hotels and Maya at Tata Digital. Noel’s son Neville Tata is involved in the retail business and heads Star Bazar. Clearly, the children are being groomed for larger responsibilities within the Tata ecosystem. While it’s still early, there are the contours of a transition plan, something that was missing for many decades.

But whether this was the right time to suggest such a change is debatable. Any speculation on the matter could be a distraction, not just for the decision makers but also for the rank and file.

What’s the role of trusts?

As with all recent crises involving the Tata group, it is the role of the trusts that needs clarification. Are they passive holders of a controlling stake or de facto operating influencers? This ambiguity queers the pitch. It isn’t a coincidence that of late, the trusts have been in the news more for their role as controlling owners of the group and less for their philanthropic work.

Globally, foundation-controlled businesses do exist and some even thrive. The Novo Nordisk Foundation, Robert Bosch Stiftung, and Sweden’s Wallenberg Foundations maintain controlling stakes in large multinationals while funding major philanthropic work. Their success hinges on professional management, clear governance, succession clarity, and strict separation between charitable goals and corporate control.

These elements appear to be under some strain at Tata Trusts. The post-Ratan Tata era has been marked by reactive decisions, from annual reappointments of older trustees to changing retirement age rules to ensure leadership continuity. This ad-hoc approach reflects a consensus-driven culture that now risks becoming a governance liability.

The Tata Group isn’t just any conglomerate. For more than a century, it has stood for integrity, excellence, and national purpose. The next phase of this journey will hinge not on who leads it, but how.