Who actually controls India’s biggest company?
A bitter power struggle over the Tata Group, a 158-year-old conglomerate with more than 1 million employees worldwide and $180 billion in annual revenue, has become a test of who calls the shots in Indian capitalism: owners, professional managers or the government.
The fight pits the family-led charitable trusts that own two-thirds of Tata Sons, the group’s holding company, against the powerful chair who runs its businesses. India’s government has emerged as a wild card, pressing Tata Sons to list on the stock market — a move that could permanently reshape its ownership and weaken the founding family’s control.
The conflict simmered for at least a year before bursting into the open. In August, Natarajan Chandrasekaran, one of India’s most celebrated CEOs, stunned the business world by announcing he would not seek another five-year term as chair. He cited opposition from one board member to his staying beyond February.
That “absence of unanimous support” would hurt the company when “many strategic projects” are under “critical stages of execution,” he wrote in a letter at the time. “Clarity on leadership is important for employees, investors, partners and other stakeholders.”
A month later, he reversed course. At a Sept. 17 meeting, a majority of the board voted to reappoint him. Noel Tata, a board member and head of the Tata Trusts, a group of public charities that owns 66% of Tata Sons, had cast the sole dissenting vote.
Tata called the vote to reappoint Chandrasekaran “illegal” because it had bypassed his veto. Later that day, he wrote that Chandrasekaran had “freely” chosen to resign and that it was time to “turn the page.” Since then, his office has filed dozens of legal motions preparing to challenge the vote.
The dispute could reverberate across Indian businesses, where founding families retain control of many of the largest companies, even when professional managers run the day-to-day operations.
Amit Tandon, founder of the Mumbai, India-based Institutional Investor Advisory Services, said he could not recall any other board mutiny against a controlling shareholder in India. About two-thirds of the country’s biggest companies are family-owned, he said.
“Business families will see the dispute as a warning that ownership alone does not guarantee control,” he said.
India’s business dynasties don’t want their hired managers wresting control of companies that families spent generations building. Chandrasekaran’s supporters see a different threat. They argue that the Tata Group is too important to India to be governed by antiquated ownership arrangements or the whims of a founding family.
Vijay Singh, a former secretary of defense who served on the Tata Sons board and remains a trustee of some of the seven charities that own it, draws a clear distinction between ownership and management.
The trustees “may be owners, but they’re not entitled to run the companies,” said Singh, who supports Chandrasekaran. “The charities and the business were meant to be unconnected.”
The stakes for this boardroom battle are enormous because Tata is woven into almost every facet of Indian life.
Arrive in Mumbai on a Tata-owned airline, and you can ride in a Tata-made taxi to a Tata hotel, passing billboards for Tata real estate or Tata life insurance along the way. The tea in your room may be Tata’s. So might your watch or jewelry. If you are reading this on a new iPhone, there is a good chance that it was assembled in India by Tata.
Few countries have a corporate institution quite like it. Tata is trusted, even loved, not just for its products but for its philanthropy. The Tata Trusts support cancer hospitals, scientific research, nutrition programs and the performing arts. Some of the charities predate India’s independence.
Now the two pillars of Tata — its businesses and its charities — are at war.
From offices high in Mumbai’s World Trade Center, Noel Tata, a descendant of the founder, Jamsetji Tata, presides over the trusts. They own two-thirds of Tata Sons, which holds substantial stakes in the group companies listed on stock exchanges, as well as its private businesses and real estate, and controls the corporate brand.
A mile and a half away, Chandrasekaran and his management team run the empire from Bombay House, the elegant headquarters built in 1924 and renovated after he took over in 2017. There, in fourth-floor boardrooms, his allies organize their defense against what they see as Tata’s overbearing interference.
The legal entanglement reflects a conglomerate with a complicated history stretching back to the 19th century. But this is more than a feud between two men. At the center of the struggle is a government push to force Tata Sons onto the stock market, turning a governance dispute into an existential fight over ownership.
In 2022, the Reserve Bank of India introduced rules that threatened to force Tata Sons to list on the stock market. Going public would require the holding company to sell 25% of its equity to outside investors, diluting existing shareholders.
The central bank’s rationale was India’s financial stability. Regulators argued that Tata Sons was so deeply enmeshed in the country’s financial system that its debt could have made it “too big to fail” — meaning its collapse might threaten the banking system. They said wider ownership and disclosure requirements for public companies would reduce the risk.
Initially, Tata and Chandrasekaran opposed a forced listing. In 2024, the group paid off all of its debt, hoping to satisfy the regulator’s demands without surrendering its private status.
But this June, the central bank said debt levels were irrelevant. Any organization with assets exceeding 1 trillion rupees, or about $10.3 billion, the bank declared, had to be listed, a threshold well below Tata Sons’ size.
Forcing a private company to sell shares to the public as protection against a hypothetical financial crisis would be an extraordinary intervention, with few comparable precedents.
By the Sept. 17 meeting, with most of the board behind him, Chandrasekaran decided Tata Sons should list. Management and the government were now aligned. Noel Tata and the trusts were determined to keep it private.
The government’s role went beyond financial regulation.
Since May, the Maharashtra Charity Commissioner, a little-known official under a state government run by Prime Minister Narendra Modi’s political party, has blocked Tata from convening one of the trusts. That has stopped him from calling a shareholder vote to remove Chandrasekaran and fight to keep Tata Sons private. The commissioner has been responding to complaints filed by some trustees, including Singh, who have filed motions challenging Tata’s control of the trusts.
Chandrasekaran is an attractive ally for the government. He rose through Tata Consultancy Services, the conglomerate’s technology services arm. Since he became chair nine years ago, the combined market capitalization of Tata’s 26 listed subsidiaries has more than doubled to about $300 billion.
But some of his boldest investments have been expensive and unprofitable. In 2022, Tata bought Air India from the government, which had nationalized it from Tata nearly seven decades earlier. The group is also undertaking a $12 billion semiconductor manufacturing project in India — a long shot that could take more than a decade to pay off, even in the best of circumstances.
Financing these ambitions can be tricky. Tata Sons has reduced its borrowing, while Tata Consultancy Services, the group’s cash engine, faces growing pressure as artificial intelligence reshapes the technology industry. Listing Tata Sons could raise capital for these long-term commitments.
Nirmalya Kumar, a former Tata Group strategy chief who worked with Noel Tata and Chandrasekaran and is now a visiting professor at the Indian School of Business in Hyderabad, sees an uncomfortable convergence of corporate ambitions and political priorities.
Kumar, who was fired 10 years ago during a boardroom clash that forced out a previous chair of Tata Sons, said he believed Modi and Chandrasekaran enjoyed a “symbiotic relationship,” pursuing showy projects with “the house money” generated by Tata’s established businesses.
Yet Kumar also thinks Tata’s ownership structure has outlived its usefulness.
A company of that size, he said, should “be public so that it can get scrutiny and is not being done on the whim of one person.”
The New York Times