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Tata Sons vs Tata Trusts—battle for Bombay House is really about moral authority

The Tatas are too important to India for the whole group to be paralysed because of one man’s (Noel Tata’s) hostility to another man (N Chandrasekaran).

It’s a measure of how much the Tata group impacts the lives of all Indians that so many of us — including those with no interest in corporate affairs — are following the current battle between Tata Sons, the holding company, and the Tata Trusts, which own two-thirds of the shares of Tata Sons.

I am not a business journalist, have not followed developments at Bombay House in recent years, and am as confused as most laymen by the technical details that seem to dominate recent coverage of the conflict. I don’t know exactly what Article 121 of Tata Sons’ articles of association means, or what the rules governing voting at the company’s board meetings are.

But perhaps that’s just as well because I feel too much detail often obscures the larger picture when it comes to the Tatas.

Let’s start with the most common misconception: that the Tatas are a family-owned company in which leadership is passed down from father to son in the manner of most Indian business houses. This is not only wrong, but it is also not how the Tatas themselves have ever seen the principle of succession.

Yes, the group was created (in its present shape) by the great Jamsetji Tata, but there is no evidence that he wanted only his direct descendants to run it. For instance, Nowroji Saklatvala ran it as chairman of Tata Sons in the 1930s.

Partly, this was because the family often did not have direct male heirs. Naval Tata (Ratan’s father) was a very distant cousin born into a family of modest means who was adopted from an orphanage at the age of 13. He played an important role within the Tatas but never got to head the group. That honour went to JRD Tata, a brilliant man who was not a direct heir either but whose father was a cousin of Jamsetji Tata.

So, even in the 1930s, though the Tatas drew their leadership from a small pool of Parsis, some of them distant relatives, father-to-son succession was never the guiding principle.

This was because the Tatas saw themselves as custodians of the empire, not as owners. The money was left to charitable trusts, and each Tata had separate private wealth to regard as their own, while making a distinction between group wealth and personal money.

Also Read: Why Tata Trusts’ Chandrasekaran........

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