Centre steps in to contain Tata Trusts infighting as listing deadline looms: Report

Two senior Cabinet ministers are expected to hold discussions in New Delhi this week with four top Tata officials - Noel Tata (Chairman, Tata Trusts), Venu Srinivasan (Vice-Chairman, Tata Trusts), N Chandrasekaran (Chairman, Tata Sons), and Darius Khambata (Trustee, Tata Trusts) - to assess recent developments that have sparked widespread concern

The Centre is preparing to step in to defuse rising tensions within the Tata Group, with senior ministers set to meet key leaders from the conglomerate amid escalating internal discord at Tata Trusts - the majority shareholder of Tata Sons - that could potentially affect the functioning of India's most valuable business house, The Economic Times reported on Monday.

Two senior Cabinet ministers are expected to hold discussions in New Delhi this week with four top Tata officials - Noel Tata (Chairman, Tata Trusts), Venu Srinivasan (Vice-Chairman, Tata Trusts), N Chandrasekaran (Chairman, Tata Sons), and Darius Khambata (Trustee, Tata Trusts) - to assess recent developments that have sparked widespread concern, ET said.

At the heart of the discussion are two key issues: containing internal divisions among the trustees of Tata Trusts to prevent disruptions at Tata Sons, and charting the path forward on the public listing of Tata Sons, a move mandated by the Reserve Bank of India's regulations issued three years ago, the report added.

The Economic Times earlier revealed that the tensions stem from a contentious meeting of Tata Trusts held on September 11, which laid bare deep divisions among trustees roughly a year after the passing of veteran industrialist Ratan Tata.

Disagreements reportedly centre around the Trusts' control mechanisms over Tata Sons - specifically, the appointment of nominee directors and the extent of information shared about board proceedings.

Matters escalated after the removal of Vijay Singh, a former Defence Secretary, as Tata Sons' nominee director. His ouster, opposed by Noel Tata and Venu Srinivasan, came alongside a proposal to induct trustee Mehli Mistry onto the Tata Sons board - a move backed by Pramit Jhaveri, Darius Khambata, and Jehangir Jehangir, ET noted.

The dispute has intensified further following an email from one trustee to others, interpreted as a veiled warning to remove Srinivasan from the Tata Sons board in a manner similar to Singh's exit. Officials cited by The Economic Times said this has raised fears of an attempt to "hijack Tata Sons" and consolidate control, potentially disrupting the conglomerate's overall governance structure.

The upcoming discussions in New Delhi are expected to seek a resolution ensuring smoother functioning of Tata Trusts and preventing spillover effects across the group. Tata officials scheduled to attend the meeting have not responded to queries, ET said.

The internal turmoil has become a major talking point across Tata Group entities, especially as the company faces challenges in restructuring its board amid uncertainty over trustee appointments.

The meeting also comes as Tata Sons approaches a crucial regulatory milestone. September 30 marked three years since the RBI classified it as an "upper-layer" non-banking financial company (NBFC), which requires a mandatory listing within three years.

In March 2024, Tata Sons sought deregistration from the RBI, seeking exemption from both the listing requirement and the associated regulatory framework. The central bank's response is still awaited, The Economic Times reported.

Meanwhile, the Shapoorji Pallonji Group, which holds an 18.37% stake in Tata Sons and has been grappling with heavy debt, has continued to push for a listing to unlock liquidity.

Government sources told ET that authorities are particularly worried after being informed that some trustees have been demanding access to board agendas and minutes, insisting on prior approvals for key decisions, and questioning the appointment of independent directors. One trustee has even been accused of targeting Tata Sons board members over strategic decisions at some group firms.

The unrest within Tata Trusts has reportedly been building for several months, with divisions sharpening as the terms of key trustees near renewal.

The reappointment process, which requires unanimous consent, may prove contentious amid allegations of conflicts of interest, inadequate financial disclosures, and governance lapses, The Economic Times added.