'Noel Tata Should Be Inducted Into Tata Sons Soon'

'The quality of a leader should be such that even if the leader is not there, the institution carries on.'

IMAGE: Noel Tata. Photograph: Kind courtesy CII/X

It will be business as usual for Tata group stocks post Noel Naval Tata's appointment as chair of Tata Trusts, said analysts. They added that the development will signal continuity.

For the markets, it will be a confidence booster as a family member and someone from the 'Tata' fold is back at the helm after the passing away of Ratan Tata.

On Friday, Noel Tata was unanimously elected chairman of Tata Trusts.

Tata Sons is the principal investment holding company and promoter of other Tata group companies.

Noel is the half-brother of the late Ratan Tata, and was already a key trustee of the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust.

After the appointment, Noel will lead the trusts that hold a controlling stake in Tata Sons.

Sixty-six per cent of the equity share capital of Tata Sons is held by philanthropic trusts that support education, health, livelihood generation, and art and culture.

Back in 1991, according to Ambareesh Baliga, an independent market analyst, Ratan Tata had to stamp his presence when he took over from J R D Tata and set the house in order. But things are different now, as all businesses are streamlined and doing well.

"I don't think anything much will change. Tata group is a perfect example of institutionalisation," says Baliga, "The quality of a leader should be such that even if the leader is not there, the institution carries on."

"That's what Tatas' have built over the years. Every person is different, and so is his/her leadership style.

"Knowing the Tata legacy, not much change is expected. Noel Tata has also not been in this role before. To that extent, we need to wait and watch," Baliga said.

"I don't think the head of Tata Sons or Tata Trusts will interfere in the day-to-day working of Tata group companies," said A K Prabhakar, an independent market analyst.

"Ratan Tata, too, did not interfere during his tenure. Noel Tata is unique and has a lot of business acumen. This is evident from the recent business forays of Trent (where Noel was elevated to the post of chairman in 2014) into lab-grown diamonds," added Prabhakar.

"The move into lab-grown diamonds can give tough competition to other jewellers that are into original diamonds. All this speaks volumes about his leadership and vision," said Prabhakar.

Noel's Appointment May Repair Relations With Mistrys

Dev Chatterjee

Mumbai

Ratan Tata's successor as Tata Trusts chairman was announced less than 48 hours after the patriarch passed away on Wednesday night at the age of 86.

Putting an end to all speculation around succession, 67-year-old Noel Naval Tata, Ratan Tata's half brother, has been named chairman of Tata Trusts and all trusts covered under it.

The unanimous decision, coming into immediate effect, was made at an hour-long meeting of the trustees of Tata Trusts here on Friday.

Sources said there was no discussion on any other contender for the top post at Tata Trusts, which has a 66 per cent stake in Tata Sons, the parent company of the $165-billion salt-to-software conglomerate.

'I am deeply honoured and humbled by the responsibility that has been cast on me by my fellow trustees. I look forward to carrying on the legacy of Ratan N Tata and the founders of the Tata Group,' Noel Tata said in a statement.

More than a decade ago, in the run up to Ratan Tata's retirement as Tata Sons chairman at the age of 75, Noel Tata was in the reckoning as his successor, but Cyrus Mistry was selected to head the group.

At that point, in an interview to a foreign newspaper, Ratan Tata had said that Noel Tata lacked experience.

Friday's announcement is extremely significant because of the control and influence the Tata Trusts can have over Tata Sons and the group.

Before Ratan Tata stepped down as Tata Sons chairman in 2012, the holding company's articles of association were amended to empower Tata Trusts with veto rights and the ability to nominate directors.

Noel Tata, who is married to Aloo Mistry, the late Cyrus Mistry's sister and the daughter of the late billionaire Pallonji Mistry whose family owns 18.4 per cent stake in Tata Sons, is not on the board of directors at Tata Sons yet.

Even if he is inducted into the Tata Sons board on a future date, the chairman's job at the holding company must be held by another person, in accordance with a special resolution passed in 2022 for better governance.

According to that resolution passed by the board of Tata Sons, the chairman of Tata Sons and Tata Trusts cannot be the same person.

N Chandrasekaran, 61, who was appointed chairman of Tata Sons in 2017, is into his second term in that role. Chandra, as he's referred to, is not a trustee at Tata Trusts.

Noel Tata's appointment as Tata Trusts chairman may also have a bearing on the strained relations between the Tatas and the Shapoorji Pallonji group, industry watchers pointed out.

Ratan Tata and Cyrus Mistry, former chairman of Tata Sons and the late Pallonji Mistry's son, were engaged in a contentious legal battle following Mistry's removal as chairman of Tata Sons in October 2016.

The dispute ended in 2021 when the Supreme Court ruled in favour of the Tatas, affirming that Mistry's removal was legal. Mistry died in a road accident two years ago.

While Noel Tata remained neutral during the Tata-Mistry fight, his appointment as chairman of Tata Trusts is anticipated to improve relations between the two families.

"With the change in leadership, the relations may change for good," said a Tata family friend, asking not to be quoted.

In terms of business, Noel Tata's performance is well regarded. Retail major Trent, which is chaired by Noel, has seen a sharp jump of 6000 per cent in its share prices in a decade as the company expanded across India riding the wave of consumption. He's also a director on the boards of Tata Steel and Voltas.

"Noel is the right choice to lead Tata Trusts. I am expecting him to be inducted on the board of Tata Sons soon," said H P Ranina, noted lawyer and a prominent voice of the Parsi community.

"He has done a good job in creating the retail business of the Tata group. Going forward, his children Leah, Maya and Neville should also be inducted on the main Tata Trusts," he said.

At present, TVS group Chairman Emeritus Venu Srinivasan, and Vijay Singh, a former bureaucrat, represent the Trusts on the Tata Sons board. Noel's children, Maya, Neville, and Leah were appointed as trustees on Tata family-linked charities in 2022.

In the fiscal year ended 2024, Tata Trusts received its highest ever dividend of Rs 933.4 crore (Rs 9.334 billion) from Tata Sons, more than double of Rs 466.7 crore (Rs 4.667 billion) in FY23.

The trusts allocate their dividend income to various charitable initiatives, including healthcare, water access, rural development, and education.

According to the Tata Trusts' 2023 annual report, the Trusts distributed 48.5 per cent of their funds for healthcare, 16.9 per cent for rural upliftment, and 16.5 per cent for education.

Another 10.4 per cent of the funds were allocated to institutions and rest for water, urban poverty alleviation and energy.

The Tata group is interestingly positioned at this point, investing billions in more recent ventures, including semiconductors, airlines, e-commerce and financial services.

Founded in 1892 by Tata group founder, Jamsetji Tata, Tata Trusts has spent heavily in the fields of education, and healthcare.

Of the 66 per cent stake in Tata Sons, the two major trusts, the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust own 27.98 per cent and 23.56 per cent respectively.

A long distance away is the third largest trust -- the JRD Tata Trust -- which controls 4.01 per cent in Tata Sons.

Others hold much lower stake -- the RD Tata Trust at 2.19 per cent, the Tata Education Trust 3.73 per cent and the Tata Welfare Social Trust also 3.73 per cent.

Feature Presentation: Ashish Narsale/Rediff.com