India File: Trouble in the House of Tata

Adani Power

04/11/2025 05:30

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Nov 4 - By Nidhi C Sai, Editor Online Production, with global Reuters staff

India's foremost industrial house, the Tatas, is once again grappling with internal divisions, a year after the death of its patriarch and almost a decade after an acrimonious feud within the group cast a harsh light on its governance and the country's family-owned businesses.

    Can the country's most storied business group resolve differences among its key members while retaining its family core? That's our focus this week.

And Prime Minister Narendra Modi is preparing his toughest reform push yet for India's debt-laden state power distributors. Scroll down for more on that.

THIS WEEK IN ASIA

Taiwan rebuffs China's protest about Japan PM meeting at APEC

Hegseth visits DMZ ahead of talks on US troops in South Korea

China extends visa-free policy to end-2026, adds Sweden to scheme

South Korea's President Lee says economy has turned a corner

Japan PM Takaichi launches economic HQ, gears up public investments

BOARDROOM BATTLE SPARKS A SENSE OF DEJA VU

It is not every day that two senior Indian government ministers intervene in a dispute at a non-state corporate group. But when it involves warring factions at the Tatas, one of the country's oldest conglomerates and best known internationally, attempts at mediation by Modi's top lieutenants reflect a sense of urgency. Especially when it could pose a threat to already fragile investor confidence.

The ouster of Mehli Mistry last week from the board of Tata Trusts - the charity arm that controls 66% of Tata Sons and, through it, an empire spanning Air India, Tata Steel and Jaguar Land Rover - marks a fresh chapter in a saga that has long blended philanthropy with corporate power.

Weeks of infighting between factions led by Tata Trusts' Chair Noel Tata and Mistry have exposed a deepening rift within the organisation that effectively controls a $180 billion empire.

The dispute, a year after Ratan Tata's death, centres on who represents the Trusts on the Tata Sons board and how to handle the planned exit of minority shareholder Shapoorji Pallonji Group, which still holds 18% of Tata Sons.

Mistry's exit stemmed from his conditional approval of trustee Venu Srinivasan's reappointment - a move that broke with the Tata Trusts' long tradition of unanimity.

The subsequent board decision to reject the reappointment of trustees, including Vice Chairman Vijay Singh, further signaled how far the group has moved from its consensus-driven decision-making that was championed by the patriarch. Singh called the development "unprecedented", saying the Trusts were entering "a different era".

Mistry, according to Indian media reports, has since filed a caveat with the Charity Commissioner in Mumbai, seeking to be heard before any changes are made to the Trusts' official records - a sign that the dispute could spill into a legal battle over governance norms and the validity of lifetime trusteeships.

The discord has grown so visible that Finance Minister Nirmala Sitharaman and Home Minister Amit Shah have urged the sides to "restore stability" - a rare instance of direct government intervention in corporate affairs.

The episode revives memories of the 2016 public spat that led to Cyrus Mistry's ouster as Tata Sons chair and the protracted legal battle that followed, harming the reputation of both the group and the country in the eyes of investors.

        With foreigners pulling some $17 billion from equities this year, this is a controversy that Modi's government would be happy to see a quick end to.

GOVERNANCE REGULATIONS UNDER SCRUTINY

The Tata Trusts tussle comes as India's regulators - from SEBI to the Reserve Bank of India and the Ministry of Corporate Affairs - are revisiting governance frameworks to improve board transparency and curb conflicts of interest.

Ironically, at the same time, the unfolding of events related to India's most trusted conglomerate shows how fragile governance can be when power is concentrated in family hands.

Other family-led empires - Reliance, Adani, Mahindra, Birla - face similar tests as they expand globally and court foreign capital. It won't be lost on them that reputation alone no longer guarantees investor trust, unless backed by transparency. The opacity of Tata Trusts' decision-making and the silence of key players highlight the governance gap.

For the Tatas, a November 11 meeting of the Trusts' board, as per media reports, could be crucial. It will determine not just whether Mehli Mistry returns, but whether India's premier business family can adapt its century-old model to an era of regulatory scrutiny and modern governance.

What are the main areas of improvement in terms of corporate governance for India's family-owned conglomerates? Write to me at nidhi.csai@thomsonreuters.com

MARKET MATTERS

India's central bank raised its short-dollar forward positions by $6 billion in September, marking the first rise in six months, as it stepped up efforts to support the rupee.

The RBI's net short position stood at $59.4 billion at month-end, reflecting continued dollar sales in the forward market.

Read this report by Reuters journalists Jaspreet Kalra and Nimesh Vora.

The rupee is at 88.7775 against the U.S. dollar, having fallen more than 3.5% this year on trade tensions with the U.S. and on foreign investors pulling out of domestic stocks.

    But Goldman Sachs is backing a bullish position on the Indian rupee, taking positive cues from developments in India-U.S. trade negotiations.

THIS WEEK'S MUST READ

Prime Minister Narendra Modi is preparing his toughest reform push yet - a bailout of more than 1 trillion rupees ($12 billion) for India's debt-laden state power distributors.

Under the proposed plan, the states will be required to privatise their electric utilities and transfer managerial control or keep control but list them on a stock exchange.

The move aims to overhaul the chronically inefficient state-run distribution firms.

Read this exclusive report by Reuters journalists Sarita Chaganti Singh, Sethuraman N R and Nikunj Ohri.

Size of RBI's forward book expanded in September https://reut.rs/3JnWX4w

 (Reporting by Nidhi C Sai; Editing by Muralikumar Anantharaman)

 ((Nidhi.CSai@thomsonreuters.com; +91 70456 55251))