Tata Group’s Succession Drama: Will Noel Tata Restore Stability or Trigger New Tensions?
“The king is dead, long live the king!”
 
This familiar proclamation, used to mark the seamless succession of a new monarch after the passing of the old, ensures continuity and prevents a vacuum of power. A similar sentiment arose when, just a day after Ratan Tata’s passing, the boards of Tata Trusts hurriedly convened to appoint Noel Tata, his step-brother, as the new chairman.
 
Noel Tata’s ascension to this powerful role comes at a key moment for the Tata Trusts which hold a 66% stake in Tata Sons Pvt Limited, indirectly controlling the sprawling business empire. As Noel Tata himself noted, the trusts remain committed to ‘developmental and philanthropic initiatives’ and ‘nation building’, but their power, structure and influence over the Tata conglomerate have expanded significantly under the late Ratan Tata’s leadership. The trusts also signal a certain ethos and culture of the group.
 
In 2000, Ratan Tata successfully ensured that full voting control over Tata Sons, once held by the charity commissioner, was restored to the Trusts. Further consolidating their influence, a 2012 amendment to the articles of association granted Tata Trusts greater sway over the selection committee responsible for appointing and removing the chairman. This change was crucial in the infamous 2016 ouster of Cyrus Mistry as chairman of Tata Sons. By 2020, yet another amendment prohibited the same individual from leading both Tata Sons and Tata Trusts—making Ratan Tata the last person to hold both titles.
 
With Noel Tata's swift appointment as chairman of Tata Trusts, several overt and subtle messages have been conveyed. Chief among them is the preservation of the Tata group’s identity as a Parsi business empire. A Tata at the helm reinforces the perception of a unique corporate character and ethic which have allowed the group to weather several governance challenges and controversies without any damage to its pristine reputation.
 
For instance, even recently, the group got away without question on a delicate matter that would have caused a scandal elsewhere. There has been no scrutiny of who issued the press release, complete with Ratan Tata’s signature, as a personal message flatly denying rumours of his critical illness on 7th October. This was just two days before his passing, when he was clearly not in a condition to have signed or dictated such a statement. 
 
So a sense of continuity, provided by Noel Tata’s appointment might be critical as a quiet power struggle unfolds within the group, closely watched by the government. A prominent Parsi industrialist told me, "There was a fear that the Tata group was beginning to change, and not for the better; Noel Tata’s appointment ensures that won’t happen."
 
He was referring to the close equation between Natarajan Chandrasekaran, chairman of Tata Sons since 2017 and Venu Srinivasan, chairman emeritus of TVS Motor Company who is vice-chairman of one of the two powerful Tata Trusts and also on the board of Tata Sons. Mr Srinivasan is also on the Reserve Bank of India’s (RBI’s) board of governors, raising a potential conflict of interest situation when it comes to a decision over whether or not Tata Sons is asked to list its shares or gets to claim that it is not a non-banking finance company (NBFC). 
 
The affable N Chandrasekaran will remain the powerful big boss of the blue-chip, US$165bn (billion) corporate empire for at least five years. He has acquitted himself very creditably and had built a strong personal relationship with Ratan Tata, which is especially significant after the ugly fracas over the ouster of the late Cyrus Mistry. 
 
Another powerful presence in the Tata group is the low-profile Mehli Mistry, who was the closest confidant of Mr Tata and is also understood to be a key beneficiary in his Will. He is on the board of all the major Tata Trusts and major Tata companies. He is also credited with influencing key appointments in the group due to his proximity to Ratan Tata and was expected to head the Tata Trusts until quiet intervention from powerful quarters led to Noel Tata’s appointment.
 
At present, three distinct power centres exist within the Tata group: Mr Chandrasekaran, Noel Tata and the somewhat controversial Mehli Mistry. Of the trio, Noel Tata may hold the strongest position. Unlike Ratan Tata, whose leadership ascension was questioned in the 1990s, given his rather lacklustre career until then, Noel Tata built a reputation of his own by entering the retail sector and leading Trent Ltd from a single Westside store in Mumbai in 1998 to over 700 stores today, with a market-capitalisation exceeding Rs2.8 lakh crore. As one close observer noted, “He is silently effective, low profile but high performing.”
 
Underestimating Noel Tata could prove as short-sighted as those who underestimated Ratan Tata’s ability to deal with the formidable satraps of the Tata group in the 1990s. His task is easier, since the group no longer has titans of the stature of Russi Mody, Darbari Seth or Ajit Kerkar. 
 
Secondly, Noel Tata’s familial connections bolster his position. He is the son of Naval Tata and his second wife Simone Tata, a former business powerhouse who founded Lakmé (later sold to Unilever India). He is married to Aloo Mistry, sister of the late Cyrus Mistry of the Shapoorji Pallonji (SP) group which is the single largest private shareholder of Tata Sons with 18.37% stake in Tata Sons.
 
The ousting of Cyrus Mistry created a bitter rift between the Tata and Mistry families, exacerbated by a lengthy legal battle with the Tata group that lasted until 2021. However, the tragic deaths of Cyrus Mistry and his father, Pallonji Mistry, in 2022, have led to some rapprochement and there is hope that a more cordial relationship between the families could further strengthen Noel Tata’s hand within the group.
 
Challenges Ahead
 
Despite Ratan Tata’s emeritus status, he exerted formidable influence over the group and ensured its cohesion. The passing of a giant exposes underlying fissures and the power dynamics within the group are now in flux. The government is also closely monitoring the situation, according to my sources.
 
One immediate challenge is the looming RBI mandate requiring Tata Sons to list its shares by September 2025. Will Tata Sons, with the presence of Venu Srinivasan on the RBI board, swing the decision to secure an exemption for Tata Sons to remain unlisted? If so, this could spark another controversy. Media reports suggest that the listing issue is not yet settled. (Read: As RBI Weighs Tata Sons' Plea To Stay Private, Public Interest Favours Listing).
 
A second factor is Tata Sons’ relationship with the SP group. Independent observers concede that the group has been badly wronged and some healing is required. Cyrus Mistry’s battle with the Tatas was further exacerbated by the fact that the group is hugely leveraged with an estimated debt of Rs50,000 crore. Their attempt to raise funds by encashing their Tata Sons’ stake, valued at around Rs2.8 lakh crore, has been blocked at every turn. For instance, Tata Sons converted itself into a private limited company (Tata Sons gets shareholders' nod to make company private) in 2017, restricting their ability to sell a part of its shareholding and wipe out its debt.
 
This forced the SP group to sell Eureka Forbes, PNP Port, Gopalpur Port and drastically cut its stake in Sterling & Wilson. It now hopes to raise funds through the listing of Afcons. A decision to allow the SP group to unlock the best possible value for their shareholding in Tata Sons (especially when 6% of the stake is already pledged) will go a long way in mending the relationship between the groups. 
 
To my mind, there are really two power centres at the Tata group – Noel Tata and N Chandrasekaran. If the latter decides that he would rather remain a highly regarded professional, then the man to watch will be Noel, who has a far bigger personal stake and connection with the group. 
 
Comments
SRS
2 months ago
Interesting article. One hopes that the Tatas will be fair to the Mistrys, and allow them to encash a portion of their stake. Maybe Tata Sons can themselves buy back the stake at a fair price? The public listing question is an interesting one. The "answer", IMHO, is that if Tata Sons abides by the rules laid out by the RBI, they should be allowed to stay private. Forcing them to go public even when in compliance with regulations would make a mockery of the rules - why have rules at al if you're going to bend them, even if you can justify it in the "public interest"?

A small correction: Noel Tata is Ratan Tata's half-brother, not his step-brother. Half-siblings share one biological parent, step-siblings share none. Ratan and Noel Tata have the same father, but different mothers.
Kamal Garg
2 months ago
With the elevation of Noel Tata as Trust Chairman and separation of Tata Sons Chairmanship and the Trusts' Chairman will be overall good and nearing/family association with Shapoorji Paloonji will be a good development to watch for, overall, it should be frictionless unless some other sulking Parsi magnet creates some new things, though, for which chances are remote.
mudit3
2 months ago
The passing of the baton has been smooth and to the right candidate, Noel Tata. There is no issue of any problems. The trusts look after philanthrophy and Tata Sons running the numerous Tata companies. All is well
Kapilesh Digamber Talalulikar
2 months ago
I salute the writer to speak her mind fearlessly, with the whole nation going gung ho over Mr Tata’s philanthropy albeit Tcs-earnings, media and society at large simply is not bothered with the source which funds it, a lot of who we are is related to our formidable years of growing up, coming from a broken family, getting a cold shoulder from JRD and the likes then,must have definitely scared him that he has made amendments to control Tata sons via the trusts without a transparent method for succession.
suchshon
2 months ago
I agree with the last paragraph.
Further I would like to mention that while Ratan Tata was a great guy,a n amazing humanitarian his business profile does not match it. This is on account of 3 projects that went awry__
1. The production of Namo car
2. The acquisition of British Steel
3. His dealing with Cyrus Mistry CEO Tatas. This was not in the best traditions of Tatas
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