MUMBAI: The power struggle within the influential Tata Trusts, the primary shareholder of the Tata Group, has escalated to a new level. A decision to infuse ₹1,000 crore into the loss-making Tata International Ltd (TIL), a company chaired by Trusts’ Chairman Noel Tata, has caused a new “explosion” among the trustees, leading to serious allegations of governance violations.
A powerful faction of trustees—including Pramit Jhaveri, Mehli Mistry, Jehangir H.C. Jehangir, and Darius Khambatta—has strongly opposed the move. They allege that the decision was railroaded through a board meeting without adequate discussion, potentially breaching the crucial Article 121A of Tata Sons’ Articles of Association, which mandates prior approval from the Trusts for major financial commitments.
What is the New Dispute?
The contentious decision was passed at a Tata Trust board meeting on September 11. “The issue is not whether TIL needed funds, but the manner in which this decision was made,” a source close to the dissenting trustees said. They argue that such a significant financial commitment was rushed, which goes against the operating principles of the Trusts.
The dissenting members also pointed out that they were informed at a very late stage about Tata Motors’ recent €3.8 billion (approx. ₹38,000 crore) acquisition of the Iveco Group, highlighting a pattern of being kept out of the loop on major decisions.
The Company at the Center of the Storm
Tata International Ltd (TIL), chaired by Noel Tata since 2010, operates across 27 countries in sectors like auto distribution and leather exports. However, the company has been struggling for years with heavy debt, foreign exchange losses, and a weak business model.
- In FY 2023-24, TIL reported revenue of ₹28,000 crore but with an operating margin of just 1%.
- By September 2024, its net debt had crossed ₹4,100 crore.
- This year, the company is projected to post a net loss of around ₹477 crore.
What Happened in the Boardroom?
During a Tata Sons board meeting on August 8, TIL’s precarious financial situation was presented. While Noel Tata acknowledged the challenges, several board members questioned the rationale behind the capital infusion.
Critically, Tata Sons Chairman N. Chandrasekaran himself warned that TIL’s actual funding requirement could be closer to ₹3,000 crore and that merely injecting capital would not solve its deeper structural problems. Despite these reservations, the funding resolution was ultimately passed.
The Real Issue: Transparency and Governance
The dissenting trustees maintain that their objection is not about the commercial aspects of the funding but about the breakdown of governance and transparency. Article 121A was specifically created to ensure collective oversight on large capital decisions. “If decisions are presented as faits accomplis, it undermines the transparency the Trusts are meant to uphold,” a source stated.
This latest conflict comes on the heels of a previous clash over the reappointment of director Vijay Singh, involving the same factions. It makes it clear that the battle within Tata Trusts is a fundamental one about its future direction and operating philosophy. In the absence of Ratan Tata, these internal feuds are raising serious concerns about the stability of the entire Tata empire.
