Mumbai: Almost a year after the Tata Group’s patriarch Ratan Tata’s demise, the Tata Trusts is now facing an internal power struggle, resulting in the trust’s vice chairman Vijay Singh’s unexpected resignation. Following Ratan Tata’s demise, the Tata Trust trustees passed a resolution requiring the yearly reappointment of the Trust’s nominated directors to the Tata Son’s board. According to the resolution, the directors who have crossed 75 years will have to apply for reappointment every year.
Vijay Singh, 77, was due to be reappointed to the Tata Sons board, but four trustees- Pramit Jhaveri, Darius Khambata, Mehli Mistry and Jehangir Jehangir opposed the move. This came even as one of them- Mehli Mistry- was looking to get nominated to the Tata Sons board. The other trustees present- Tata Sons Chairman Noel Tata and TVS Chairman Venu Srinivasan- opposed the move, saying the due processes weren’t followed, as per a report by the Economic Times.
The Tata Trusts controls 66% of the Tata Group’s holding company, Tata Sons. This internal strife is concerning, given the prestige and power associated with getting appointed to the Tata Sons board, the holding company for the $165 billion conglomerate, having interests in diverse businesses like IT, Power generation, FMCG and Hotels.
Unanimity is crucial here, given the high stakes that come with the job. Besides the Vice President, the trust also has to nominate three more trustees, after JLR Chief Ralph Speth, Piramal Enterprises chief Ajay Piramal and finance veteran Leo Puri.
Another reason for the simmering friction has been the lack of information shared by the nominee directors. According to reports, at least one trustee has accused nominee directors of not disclosing information on time.
Trustees who are not on the board of the company feel that the information shared by the nominee directors is inadequate. This has been a subject of simmering friction in recent months, and at least one trustee has accused nominee directors of keeping the rest of them in the dark, according to people close to the development.
Trustees who are directors feel they are only required to share key developments and decisions with other trustees as they have fiduciary responsibilities as board members of a large and influential company, where business-sensitive information is shared.
To end the impasse, the Trust may seek a professional search firm to shortlist candidates, to avoid conflict of interest, as per people following the developments. Following SEBI’s updated mandate, the group’s NBFC arm, Tata Capital, is all set to launch its IPO by October, forcing the Trust to solve this impasse urgently before it can affect investor sentiments.
