‘Trouble’ and ‘Tata’ aren’t two words that often come together in the same context. In fact, India’s second biggest conglomerate (behind Reliance) often gets away with a halo and social media fan gushing most of the time, even when one of its products fails or a new announcement is made. But not this time.
The ₹32 lakh crore or so business behemoth is going through a churn, which is par for the course for most business houses at one stage or the other. But the difference here is that Tata is no ordinary company—for millions of middle-class Indians, it is idealism personified. So the biggest blowback to recent reports of internal rifts at the top, regulatory pressures over its status and an apparent financial squeeze on bleeding businesses has been to that ‘spotless’ reputation.
Having said that, the post-Ratan Tata era has not been kind to a group that has been on a frenzied growth path under the leadership of N.Chandrasekharan. Now, thanks to global churn, in part, that relentless pace has come back to haunt him and many of the new businesses. Questions are being raised, and answers are not being found easily. Let’s take a quick dive into what the essential issues are:
Status of the company
To get a grip on the present trauma roiling Bombay House, it is first important to understand how the group is structured. The several incorporated companies—30, at last count—all come under the parent company Tata Sons, which in turn is majority-owned by philanthropic Tata trusts, which are controlled by the family. The family members also hold some stakes directly, while the rest of the stake is held by some group companies and minority stakeholders, significantly the Shapoorji Pallonji group or SP, which is into real estate, construction and engineering—it holds 18.4 per cent of Tata Sons, having started acquiring the shares since the 1930s.
Now, SP’s promoters, the Mistry family’s connection to Tata is not just business—the families have married into each other, too, with the present Tata Chairman Noel Tata, married to Aloo Mistry, sister of Cyrus Mistry, who, if you remember, was once the chairman of the Tata Group itself. In the mid-2010s, Cyrus was unceremoniously removed from the chairman post by Ratan Tata, which led to a bitter feud between the two families.
But the latest development comes from what many experts have cited as the massive debt SP has incurred. The group’s logic is simple—why not take Tata Sons into the stock market, which will allow them to unlock the value of their 18.4 per cent shares, which, depending on which estimate you go by, is valued anywhere from ₹80,000 crore to as much as ₹1.75 lakh crore.
The hitch in the whole thing? The Tata family, and by extension the Trusts, abhor the whole idea of going public.
Throwing a powder keg into this simmering fire has been none other than India’s central bank, the RBI. It designated Tata Sons as an upper-layer NBFC, or non-banking financial company, since it is a core investment company that raises money and invests in its many group companies. This automatically meant that the company had to go public.
The deadline for this was 2025, which came and went, with Tata Sons trying all sort of manoeuvring to get out of going public. This, while its biggest minority stakeholder, SP Group, was wholeheartedly pushing for it! The stage was set for a showdown.
Trouble at the top
Another matter has been over the extension of tenure of the chairman and Ratan Tata’s handpicked chairman, N. Chandrasekharan. A third term, many thought was a shoo-in, but was questioned in board meetings.
In fact, Noel Tata himself is believed to be a longer extension for Chandra, leading to whispers of generational change.
Controversies also erupted over the extension of the likes of Vijay Singh, a former Defence secretary, as well as Venu Srinivasan, former TVS supremo, over their board memberships of various Tata entities.
Money for nothing
And in another rare instance one doesn’t generally associate with a genteel company like the Tatas, questions were raised over many money-guzzling businesses the Tata group, or rather Chandra in particular, had gambled on in recent years. In particular, new-gen businesses like BigBazaar, Tata Digital (Tata Neu app) and Agratas (battery business).
Of course, the bottomless hole Air India’s takeover has become for the Tatas—the airline suffered losses of ₹22,000 crore last year—was another uncomfortable thorn on Chandra’s precarious throne.
As if all this were not enough, TCS, often the saviour cash cow for the company, is in choppy waters—not only is the advent of AI threatening its bottom line, but recent incidents like the Nashik BPO scandal have dented its reputation further.
The big day
With tales of rift and disagreements all over the media, the board meetings coming up will be crucial to the future course, and perhaps more importantly, the influence and reputation of this storied legacy organisation.
Tata Trusts meet coming Monday, followed by Tata Sons on June 12—all vexatious topics, from listing in the stock markets to Chandrasekharan’s extension to even the future of Air India, could be discussed threadbare.
But a consensus on all the matters, many believe, would be nothing short of a miracle.
