Questions behind the twin crises

Is the Tata Group a family-owned business or a professionally-managed entity? Is Tata Trusts, which is the largest shareholder with a 66 per cent stake in Tata Sons — the holding company of the salt-to-software conglomerate — a promoter in the traditional sense? How important is the Tata name when it comes to the top leadership in the group? Can a charitable organisation, such as Tata Trusts, steer and control a diverse group with some 26 listed entities that alone are valued at around $320 billion? Is there any single individual or a group of individuals representing the Tata Group as its owner?  Should the structure of the Tata Group change to address some of the anomalies prompting the above questions? 

Over the last 20 days or so, these questions have surfaced repeatedly in one context or another. Two developments, within a week of each other in August, triggered them. The first event was on August 12, when N Chandrasekaran (popularly called Chandra) announced he would not offer himself for reappointment as Tata Sons chairman once his second term ends in February 2027. The reason behind the surprise move was there in Chandra’s letter to the Tata Sons board of directors as well as in the subsequent statement issued by the company: One member at the Tata Sons board meeting on February 24, 2026, did not support a Resolution that was unanimously passed by Tata Trusts last year. The Resolution, which was recorded and recommended by the Tata Sons Nomination and Remuneration Committee, was to renew Chandra’s term as executive chairman for another five years. 

The second development that brought to focus many of the questions mentioned above was the August 18 adjournment of the Tata Sons annual general meeting (AGM). This was the first time in the 100-year history of Tata Sons that an AGM had to be adjourned. The reason for the adjournment was a lack of quorum. The Tata Sons Articles of Association (AoA), which has been amended from time to time by shareholders with Tata Trusts being the prime mover by virtue of its 66 per cent holding, mandates joint representation of Sir Ratan Tata Trust (SRTT) and Sir Dorabji Tata Trust (SDTT) —the two core trusts — at the AGM. That was not possible as SRTT’s decision-making was frozen by the Maharashtra Charity Commissioner earlier this year over an alleged violation related to perpetual trusteeship norms.    

While there has been fuzziness around the reasons precipitating the twin crises, within days of each other last month, a closer look will show a functional arbitrariness in both cases. Chandra’s decision to not offer himself for a third term could be a matter of individual preference in a given situation. But the events leading up to it reveal a systemic problem at Tata Trusts. An unanimous Resolution passed by the two core bodies of Tata Trusts — SRTT and SDTT — losing unanimity a few months later at the biggest decision-making body of the group — Tata Sons board — signals an organisational weakness. The Tata Trusts Resolution on Chandra was endorsed by its Chairman Noel Tata, and it was opposed at the Tata Sons board meeting by the same person as a nominee trustee. 

Even as questions around profitability of some Tata entities such as Air India and Tata Digital were raised by Mr Tata while opposing Chandra’s third term, the real reason of his change in stand, within a few months, has not been made clear. The age of superannuation has also been a part of the narrative but not explicitly. In the Tata Group, executives retire at 65. Going by that rule, Chandra, 63, would have less than two years as executive chairman of Tata Sons if he was to get a third term. This fact was not hidden when Tata Trusts passed the Resolution last year, while praising Chandra’s achievements and unanimously backing  “continuity’’ at a time when the group was betting on futuristic areas. If age was an obstacle, was there any board-level discussion on a non-executive chairman position for Chandra, like in the case of Ratan Tata? Unlikely, it seems. 

In the case of the Tata Sons AGM adjournment, the alleged violation of trusteeship norms by SRTT could have been addressed in a timely manner. The Maharashtra government, through an Ordinance, introduced an amendment to the Maharashtra Public Trusts Act 1950 on September 1, 2025. According to this law, perpetual or lifetime trustees were capped at one-fourth of a public trust’s board strength. Tata Trusts may have had reasons to believe the new law was not meant for existing arrangements, but it should have sought legal clarifications and discussed remedial measures over the last many months. SRTT trustees are Noel Tata, Venu Srinivasan, Jimmy N Tata, Jehangir HC Jehangir and Darius Khambata. Three of them — Noel Tata, Jimmy N Tata and Jehangir HC Jehangir — are life trustees, while only one can remain life trustee, according to the September 2025 amendment. 

Irrespective of whether the Tata Group is described as a professionally managed or a family-owned business, the largest shareholder of Tata Sons must ensure there’s no further storm in a group that stands for international standards and stability.