Two years on without Ratan Tata, the war for control rages on in the empire

As he watches down from the heavens, one wonders what might be going through Ratan Tata’s mind. It has been exactly two years since his death, and a bitter war for control is now playing out in full public view within the conglomerate he once headed.

With revenues of $185 billion, the stakes are extraordinarily high in an empire that spans diverse businesses and has justifiably earned the salt-to-software moniker.

N. Chandrasekaran, Chairman of Tata Sons, is locked in a fierce battle with Noel Tata, Ratan Tata’s half-brother and Chairman of Tata Trusts. The rub is that Tata Trusts owns 66% of Tata Sons, the conglomerate’s unlisted holding company. It is a very unique shareholding structure and intriguing when one compares it to the landscape of companies in India that are promoter-owned. That is less complicated, making succession battles somewhat predictable.

What is playing out at the Tata Group is vastly different—and highly dramatic. Although Tata Trusts owns two-thirds of Tata Sons, its presence on the board is one-third of the total composition.

MUST READ: TCS shares rally 5%; top 5 IT stocks add Rs 56,000 cr in m-cap, shrug off H-1B visa suspension

Noel Tata and Venu Srinivasan, Chairman of TVS Motor Company, are currently the Trusts’ nominees. Logically, they ought to be aligned on all issues, but that’s not quite the tale.

Tata has not favoured a third term for Chandrasekaran, who took charge in 2017 soon after the ouster of Cyrus Mistry, whose family owns 18.4% of Tata Sons. Srinivasan, however, thinks otherwise. Equally contentious is the listing of Tata Sons—it has not found takers with its ex-directors—with Tata publicly expressing reservations. Srinivasan, who was once not in favour of it, is now backing it.

It is not as though Ratan Tata had it easy when he moved into the corner office. The feuds with Russi Mody, Ajit Kerkar and Darbari Seth were hard-fought, but Ratan Tata ultimately emerged triumphant. Today’s situation is quite different, with Chandrasekaran—a professional handpicked by Ratan Tata for the top job—going all out against Noel. The turn of events has been startling. On August 12, Chandrasekaran did not offer himself for reappointment after his term ends on February 20 next year. Yet, just over a month later, the Tata Sons board reappointed him.

Four members backed him, while Noel opposed the move. This raised a fundamental and perhaps the most pertinent question: can a board override the decision of its largest shareholder? Tata Trusts quickly called the appointment illegal. With Abhishek Manu Singhvi representing the Trusts and Harish Salve appearing for Tata Sons, the dispute could well end up in court.

Ratan Tata wanted the group to grow and spread its wings across the world. That expansion has continued with gusto, but he could hardly have anticipated this battle. If recent events are any indication, it could be a long haul.

ALSO READ: Succession battle breaks out in Venu Srinivasan’s family: TVS camps disagree over business division