Next Gen at Tata Trusts | The Financial Express

Next Gen at Tata Trusts

The trusts must focus on their philanthropy remit and leave the running of the business to professional managers.

Next Gen at Tata Trusts
Before Mistry, Tata Trusts had inducted Noel Tata, 65, on the boards of two trusts, after he stepped down as managing director of Tata International. (IE)

By inducting Mehli Mistry, 62, who has in the past publicly referred to Ratan Tata as a “friend and mentor,” as a director on the boards of two of its important trusts, Tata Trusts has added more urgency to its succession issue. It also shows the keenness of Ratan Tata, 84, to entrust key allies with responsibilities to manage the affairs at the country’s largest philanthropic institution. Mehli is the estranged first cousin of the late Cyrus Mistry, and was dragged into the Tata-Mistry spat after the latter accused him of getting undue favours from the group when Ratan was at the helm—a charge dismissed by the courts. While no one yet knows who will succeed Ratan as the chairman of Tata Trusts, the latest move also strengthens the generational change in the board of trustees as most of the members will now be in their 60s. Only Ratan, Vijay Singh and R K Krishnakumar are in their late 70s or 80s.

Before Mistry, Tata Trusts had inducted Noel Tata, 65, on the boards of two trusts, after he stepped down as managing director of Tata International. Apart from Ratan himself, Noel is now the only family representative in the trusts. Ratan and Noel’s family have bonded well in recent years after an initial frosty relationship. That the trusts are now looking for Next Gen leaders from within the extended Tata family is also evident from the induction of Noel’s children into Tata Medical Centre Trust’s board, a Tata Trusts affiliate. All three were already working in middle management roles in the group.

In the normal course, the succession issue at a charitable institution like Tata Trusts should be of academic value only. But it isn’t—for two reasons. One, the rich heritage of the Tata Trusts whose journey began in 1892 with Jamsetji Tata setting up the JN Tata Endowment for higher education of Indians. So the public interest is understandable. The second, and the more important, reason is the trust’s 66% stake in Tata Sons, which is the holding company of the sprawling Tata group. Mehli’s induction in the main trusts is important also because it comes within a couple of months after Tata Sons passed a special resolution that stipulated that the chairperson of Tata Sons and Tata Trusts will not be the same person. The purpose of this exercise was laudable: to ensure an arm’s-length relationship and professionalism when India’s largest conglomerate makes business decisions. The involvement by the trusts will be minimal to the extent of three nominee directors present on the Tata Sons board.

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Hopefully, this would help avoid a situation when the “global search” to select a successor to Ratan Tata as chairman of Tata Sons ended in choosing Cyrus Mistry, who was a part of the search committee even a few days earlier. The separation of powers between the chairmen of Tata Trusts and Tata Sons needs to be worked out in detail. For example, what happens when they differ on a big decision taken by Tata Sons? In such cases, will the Tata Sons chairman lose his job? Or will he be allowed a free hand to carry on with his professional duties? The ideal situation will be for Tata Trusts to focus just on its philanthropic activities while leaving the job of running the business to professional managers.

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First published on: 03-11-2022 at 04:30 IST