Tata Trust officials are going to meet on many issues on Friday.
The trust of the country’s largest and oldest businessman Tata Group is going to meet today i.e. on Friday. In which many things will be discussed. This meeting is also very important because there have been many disputes in the trust since last one year. To solve these, the Central Government and even the Home Minister and the Finance Minister had to come forward. People familiar with the matter said that the directors of Tata Trusts are scheduled to hold a meeting on Friday. This week, government officials intervened to defuse a dispute in the boardroom of the powerful philanthropic foundation, which indirectly controls Tata Group, India’s oldest conglomerate.
The meeting follows a government-mediated discussion on Wednesday in which officials had urged representatives of Tata Trusts and the group’s holding company Tata Sons Pvt Ltd to resolve their differences and avoid any disruption in the group’s operations. People familiar with the matter said on the condition of anonymity that this matter is personal. The controversy escalated when some trustees removed former Indian Defense Secretary Vijay Singh as a nominee director from the Tata Sons board and attempted to remove another director, Venu Srinivasan, the people said. Both are considered close to Tata Trusts Chairman Noel Tata.
The trusts hold 66 per cent of Tata Sons, giving them the right to appoint one-third of its board members and a veto on key decisions. This structure gives trusts decisive influence over appointments and strategy – and has become the medium through which power struggles are taking place. Any serious rift within the Tata Trusts could have a serious impact on Tata Sons and the broader Tata Group, which comprises 26 publicly listed companies and whose total revenues are reported to exceed $180 billion in 2024-25.
Tata Sons IPO
People familiar with the matter said one of the points of difference between the directors is the possible listing of Tata Sons. The central bank of India had earlier classified Tata Sons as a high-level non-banking finance company, which requires it to go public. Sources said some trustees are concerned that the IPO will reduce their veto rights and expose the company to takeover risks and strict administrative rules.
The sources further said they are particularly concerned that the “minority stake” voting provisions could give greater influence to a key minority stakeholder, the Shapoorji Pallonji Group – potentially transferring power from the Tata Trusts to the Tata Sons board and public investors.
Sources said the issue is not expected to come up any time soon – Tata Sons expects the Reserve Bank of India to issue new guidelines by the end of the year, which could exempt the group’s holding company from mandatory share sales. But according to sources, Tata Sons Chairman Natarajan Chandrasekaran has been asked by the trustees to initiate talks with Shapoorji Pallonji Group for a peaceful exit from the Tata holding firm.
Who will be harmed by the delay in IPO?
Any delay in Tata Sons’ IPO will hurt Shapoorji Pallonji Group, which is trying to sell its 18.37 per cent stake to reduce debt. The debt-laden construction and engineering company is struggling to monetize its stake, one of its few major assets, as financial stress deepens following the pandemic.
However, no specific exit plan or framework has been provided by Tata Trusts yet. According to sources, Shapoorji Pallonji Group is actively considering several options. These include purchasing part or full shares of their stake by Tata Sons. Bloomberg News reported in August that Shapoorji Pallonji Group has a clear plan for potential earnings. They intend to use part of the amount to repay the debt of their infrastructure unit, which will help reduce their borrowing costs.