Govt to step in amid Tata Trusts rift threatening Tata Sons operations: Report

The government is preparing to step in to ease tensions at Tata Trusts, the majority shareholder of Tata Sons, amid concern that internal divisions among trustees could disrupt operations at the country’s largest conglomerate, The Economic Times (ET) reported on Monday, citing people familiar with the matter.

Two senior cabinet ministers are expected to meet four top Tata officials — Tata Trusts chairman Noel Tata, vice-chairman Venu Srinivasan, Tata Sons chairman N. Chandrasekaran and Tata Trusts trustee Darius Khambata — in New Delhi this week to discuss recent developments, the newspaper said.

The meeting will focus on containing the rift within Tata Trusts and ensuring it does not affect the functioning of Tata Sons or its group companies, ET said.

It will also address the pending issue of a potential public listing of Tata Sons, which the Reserve Bank of India (RBI) had required after classifying the company as an “upper layer” non-banking financial firm in 2022, according to the report.

The government is reportedly concerned that disagreements among trustees, including over the appointment of nominee directors to the Tata Sons board and access to board information, could spill over into governance issues at the $180 billion salt-to-software conglomerate.

The divisions deepened after the forced exit of Vijay Singh, a former defence secretary and one of Ratan Tata’s closest confidants, as a nominee director on the Tata Sons board.

Trustees Noel Tata and Venu Srinivasan reportedly opposed the move as well as a proposal to appoint another trustee, Mehli Mistry, to the board.

The tensions have intensified further after one trustee sent an email suggesting Srinivasan could be removed from the Tata Sons board, a move some insiders view as an attempt to “wrest control” of the holding company, ET said.

The turbulence at Tata Trusts comes as Tata Sons faces a regulatory deadline related to its listing obligation. The company, which applied in March to deregister as an NBFC to avoid the listing requirement, is still awaiting a response from the RBI.

The Shapoorji Pallonji Group, which owns 18.37% of Tata Sons and has been seeking to unlock liquidity amid its debt troubles, has pushed for a public listing.

The government has grown more concerned after being informed that some trustees have sought greater access to board documents and approval over major decisions, ET said.