New Delhi, India – An unprecedented power struggle has erupted at the top of one of India’s largest conglomerates, pitting the board of its holding company Tata Sons against its majority shareholder Tata Trusts. Last week, Tata Sons extended Chairman N Chandrasekaran’s term and said it would consider publicly listing the holding company, flying in the face of the family charity that controls the 158-year-old Tata Group. Extending Chandrasekaran’s chairmanship and taking Tata public is at the heart of the family-linked feud – and its outcome will not be limited merely to the group’s headquarters at Bombay House.
Collectively, listed Tata companies have a market capitalisation of $277bn and influence over 17.7 million retail shareholders apart from pension funds, insurers and mutual funds, investment advisory firm InGovern said. So what’s behind the bitter brawl inside one of the corporate world’s most consequential boardrooms? The Tata Group business conglomerate spans industries from information technology and automobiles to steel, power, aviation, chemicals and consumer goods.
It has 26 publicly listed companies, including TCS and Tata Motors. They have a combined market capitalisation of $277bn and operate across more than 100 countries. Tata Sons serves as the group’s principal holding and investment company.
The group’s humble beginnings go back more than 150 years when Nusserwanji Tata, born into a Parsi priest’s family in Gujarat, moved to Mumbai (then Bombay) in the mid-19th century and entered the trading business. He later expanded into trade with China before his son Jamsetji Tata built the business into an industrial group, riding on deals in cotton and opium. Opium was then banned by China’s Qing rulers, and Nusserwanji found a way to smuggle it.
The conglomerate’s real breakthrough came when the United States Civil War broke out in 1861. The disruption to US cotton supplies sent Indian cotton prices soaring and transformed the fortunes of Bombay’s merchants, including the Tatas. Their businesses turned into an empire over coming generations.
Jamsetji Tata died in 1904, and his sons Dorabji and Ratanji Tata carried his businesses forward. The family’s charitable trusts became major shareholders of Tata Sons. JRD Tata, who became chairman in 1938, transformed the group into a diversified industrial enterprise, expanding into aviation, including India’s flagship carrier, Air India; chemicals; and engineering.
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