Tata Trusts to reform operations, reduces management roles and expenses

The decision comes after an internal audit and financial review by trustees, which revealed a notable increase in staffing expenses, reaching approximately Rs 180 crore, according to a report

Tata Trusts is currently undergoing a restructuring process to optimise its operational and management costs, reported The Economic Times citing people familiar with the developments.

 

As part of this reorganisation, the roles of Chief Financial Officer (CFO) and Chief Operating Officer (COO) are being phased out, and the organisation is reducing its dependence on external consultants, the report said.

 

This cost-saving initiative was set in motion before the appointment of new chairman Noel Tata. The decision comes in the wake of an internal audit and financial review by trustees, which revealed a notable increase in staffing expenses, reportedly reaching approximately Rs 180 crore. The additional expenditures from direct implementation projects contributed to the workforce costs, pushing the total to Rs 400 crore in the years leading up to 2022, mentioned The Economic Times.

 

These direct implementation projects — activities carried out directly by a trust through contractors as part of its donations — will also be scaled back to a minimum and retained only to fulfil essential commitments, sources added.

 

The CEO, Siddharth Sharma, is ensuring that rigorous governance checks and continuous monitoring are embedded in the process, according to sources cited by the report.

 

By reducing management layers, Tata Trusts seeks to allocate more resources to its philanthropic work while minimising administrative costs. Decision-making and governance are expected to rely on a streamlined executive committee.

 

Tata Trusts is said to have capable finance professionals and internal talent to maintain smooth operations and efficient financial management, the report added.

 

The scale of operations will determine the necessary operational costs, including senior roles, but Anand Desai, managing partner at DSK Legal, underscored that cost-consciousness is vital for philanthropic entities. He noted that organisations benefiting from philanthropy can be held accountable with thorough documentation and oversight from the Trust’s board and staff. Desai also mentioned that cost pooling and the strategic use of domain experts could further enhance efficiency.

 

Tata Trusts, which oversees various philanthropic entities within the Tata Group, has long been involved in sectors such as education, healthcare, and rural development across India. However, its operational expenses have come under review as philanthropic models worldwide shift toward more flexible and cost-effective structures. Approximately 66 per cent of Tata Sons' equity capital, the Tata group’s holding company, is held by philanthropic trusts endowed by Tata family members.

 

On October 11, Noel Tata was appointed chairman to lead these philanthropic entities, having already served as a trustee for the Sir Dorabji Tata Trust and Sir Ratan Tata Trust.

 

An executive committee, established under the late Ratan Tata’s leadership, has been monitoring costs and will continue in this capacity. Designed to ensure collective rather than individual management, this committee comprises four trustees: Noel Tata, Mehli Mistry, Venu Srinivasan, and Vijay Singh.