NEW DELHI, OCT 11
Tata Trusts, India’s oldest philanthropic institution, saw a generational change on Friday, with Noel Tata, 67, taking over as chairman, succeeding Ratan Tata, 86, his half-brother, who passed away on Wednesday in Mumbai.
The decision, Tata Trusts said in a statement, was taken “unanimously” in separate meetings held on Friday. Noel was already a key trustee of the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust.
“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 said.
The Narendra Modi government’s last decade and more has seen demonetisation, one of the objectives of which was to launch a frontal assault on black money, and several compliance-boosting measures that constitute enhanced “tax effort”.
Ratan Tata had not named a successor for the leadership of Tata Trusts before his death, sparking speculation about the future governance of the trusts. That has been laid to rest promptly by the trustees who met on Friday. Consisting of a number of entities, Tata Trusts, which together control 66% of Tata Sons, the holding company of the $165-billion Tata group, undertakes a number of social initiatives across sectors from water to sanitation, education to environment.
The true sway of a Tata Trusts chair became apparent for the first time in 2016 when Ratan Tata led the shock ouster of Cyrus Mistry as Tata Sons chairman. Tata Trusts as the largest shareholder of Tata Sons, oversees the running of the salt-to-software conglomerate, providing it strategic direction.
Apart from Tata Trusts, Shapoorji Pallonji group owns 18.4%, Tata group companies own 12.8% and the Tata family owns 2.8% of Tata Sons. Noel is the son of Naval H Tata and Simone Tata, and is married to Aloo Mistry, linking him to the influential Mistry family. His appointment aligns with the Tata Trusts tradition of being helmed by a person from the Parsi Zoroastrian community. Noel, best-known for transforming Trent into one of the country’s best-performing listed retailers with bets such as Zudio and Westside, has his task cut out of maintaining a balance between ownership and professional management. “Noel is a great choice and his leadership will benefit the organisation. His appointment will also ensure stability and continuity within Tata Trusts,” HP Ranina, senior advocate and corporate lawyer, said.
Noel’s over four-decade-old association with the Tata group and his deep understanding of businesses from Trent to Voltas, where he is the chairman and Tata Steel and Titan, where he is the vice-chairman, is expected to hold him in good stead in his new role.
But there are challenges too, such as simplifying the complicated holding structure of the Tata group. Experts have said that the structure of having charitable trusts owning shares in Tata Sons, and therefore, exercising control in operating companies, implies that for-profit and not-for-profit priorities could clash. While Tata group firms have a say in Tata Sons, the shareholding is a fraction of the charitable trusts, experts tracking the conglomerate said. Noel may also have to oversee the listing of Tata Sons in future though it has managed to avoid it for the time being by voluntarily surrendering its registration certificate to the Reserve Bank of India after repaying over ?20,000 crore.
Recent research reports have indicated that Tata Sons could fetch a valuation of Rs 11 trillion on listing and the IPO size could be around ?55,000 crore. A potential listing could also untangle its shareholding which could trigger a re-rating.
