The crisis at Tata Trusts: What’s tearing apart India’s most powerful board

Directors of Tata Trusts are likely to meet in Mumbai today in what will become a pivotal meeting for the future of the Tata group. The rally comes after the Center quietly intervened this week to ease mounting tensions within the powerful charitable trust that controls two-thirds of Tata Sons, the $300 billion holding company behind India’s most famous conglomerate.

According to Bloomberg, government officials held a closed-door meeting with representatives from Tata Trusts and Tata Sons on Wednesday. The message from Delhi: Resolve disagreement within the board and avoid disrupting one of India’s most strategically important corporate entities.

What caused the crack?

The rift exploded last month when some Tata Trust directors removed former Defense Minister Vijay Singh as a nominated director from the Tata Sons board and tried to sack Venu Srinivasan, another director nominated by the Tata Trust. Both are seen as close to Noel Tata, who heads the Tata funds.

Friday’s meeting is the first formal meeting since that acrimony emerged – and is taking place a year and a day after Ratan Tata’s death, highlighting the leadership vacuum left by his absence.

Tata Trusts and Tata Sons did not comment on the Bloomberg report. Business Today has been unable to independently verify the allegations attributed to individuals familiar with the matter.

Ratan Tata’s long-term strategy has been to divide the leadership of the Tata Trusts and Tata Sons to avoid concentration of power. But that structure now appears to be eroding, with the seven trustees split into two factions.

One faction includes Noel Tata, Singh and Srinivasan – all of whom have seats on the board of Tata Sons. The others include Mehli Mistry, Pramit Jhaveri, Darius Khambatta and Jehangir HC Jehangir, none of whom are on the board. This group has reportedly accused directors on the Tata Sons board of withholding key information.

IPO anxiety and SP Group exit

At the heart of the split is a debate over whether Tata Sons should go public. The Reserve Bank of India has classified Tata Sons as an “upper tier” NBFC — a classification that mandates the listing, Bloomberg reported. Some trustees fear that the IPO will weaken the veto rights of the Tata Trusts and shift power to minority shareholders, especially the Shapoorji Pallonji (SP) group, which owns 18.37% of Tata Sons.

An IPO would also subject Tata Sons to stricter governance standards, including “minority-majority” voting – which could amplify SP Group’s influence.

While no decision is imminent, the trustees have asked Tata Sons Chairman N. Chandrasekaran to explore a peaceful exit strategy for SP Group, which is under financial pressure and eager to sell its stake. Bloomberg previously reported that SP Group is considering selling its shares back to Tata Sons to ease its debt burden.

What to expect on Friday

According to Mint, Friday’s meeting could set the overall direction of the trusts and their ability to work cohesively. While no immediate flashpoints are expected, insiders say rapprochement could be possible — if both sides prioritize group stability over internal rivalries.