 "Tata Sons")
The split within Tata Trusts, which holds around 66 per cent in Tata Sons, the holding company of the salt-to-semiconductor conglomerate, over renewal of trustees’ tenures could unleash a fresh bout of dispute, according to sources.
This comes amid a divergence of views over a possible listing of Tata Sons, some 10 years after one of the biggest corporate battles India Inc witnessed — Tatas versus Shapoorji Pallonji group.
At the middle of it all is Mehli Mistry, a trustee at Sir Dorabji Tata Trust and Sir Ratan Tata Trust. With just two days to go for the deadline to renew Mistry’s term at the two core Tata trusts, approvals from three trustees are still pending, it is learnt. The last date for sending approvals is October 28, according to a source close to the development.
If Mistry, a businessman and a close associate of Ratan Tata, fails to get a nod from all trustees of Tata Trusts for his term renewal, it will be an unprecedented development that could escalate the ongoing tensions. Sources indicated that a consensus on renewing Mistry’s term looked tough.
Tata Trusts did not respond to Business Standard queries on the matter.
It is learnt that three trustee — senior lawyer Darius Khambata, banker Prameet Jhaveri and Jehangir HC Jehangir (chairman and CEO of Jehangir Hospital)— have approved renewing Mistry’s term. Mistry is related to the Shapoorji Pallonji family, which has been in a long-standing corporate battle with the Tata Group after Cyrus Mistry (a scion of the Shapoorji group) was ousted as Tata Sons chairman in 2016.
Khambata, Jhaveri, and Jehangir have maintained their support for Mistry during the Tata Trusts rift that became public recently. The resolution is still awaiting replies of Tata Trusts Chairman Noel Tata and vice-chairmen Venu Srinivasan, and Vijay Singh — all three have been on the opposite side.
Noel Tata, who’s half brother of Ratan Tata, holds leadership position in several Tata group companies. He was chosen chairman of Tata Trusts after Ratan Tata’s passing last year. Industrialist Srinivasan and former bureaucrat Singh are the two trustees backing Noel Tata.
Last week, Srinivasan managed to secure the approval of all trustees of Tata Trusts. However, Mistry put out a caveat, stating that the renewal of term must be reciprocal for all trustees.
While the Mistry camp has reiterated that renewal of term is automatic, after which a trustee becomes a life trustee, the other group holds a different view, sources pointed out. Last year, soon after Ratan Tata’s passing, Tata Trusts passed a resolution that every trustee would get life trusteeship once their tenures are renewed. The legal community has been torn between the two views.
Together, Sir Dorabji Tata Trust and Sir Ratan Tata Trust hold a 51 per cent stake in Tata Sons.
A rift surfaced among the trustees after the Mistry camp withdrew the nomination of former defence secretary Vijay Singh from the Tata Sons board as a Trusts’ nominee. The other two nominee directors on Tata Sons board are Noel Tata and Venu Srinivasan. Tata Trusts is entitled to appoint one-third of the directors on the Tata Sons board and hold veto power.
To resolve the crisis at Tata Trusts, Home Minister Amit Shah and Finance Minister Nirmala Sitharaman had to intervene recently. They met top representatives of Tata Sons and Tata Trusts to discuss the matter. The ministers are learnt to have advised stability at the Tata group considering its importance in the Indian economy. Coinciding with this is the mandate of the Reserve Bank of India on listing of Tata Sons by September 30, 2025, under its scale-based regulatory framework introduced in October 2022. Tata Sons had sought an exemption from listing last year. Even as Tata Trusts advised Tata Sons to engage with RBI to prevent a public listing, Shapoorji Pallonnji, which holds about 18 per cent in Tata Sons, recently reiterated its position pushing for a listing of the Tata Group’s holding company.
