Tata bears marks of quasi-nationalisation

Coca-Cola

21/09/2026 04:08

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Shritama Bose
MUMBAI, Sept 21 (Reuters Breakingviews) - A boardroom battle at the $260 billion Tata group is turning into a test of institutional credibility for India. Multiple official bodies are driving Tata Sons, the conglomerate's holding firm, toward a public offering of its shares, a move strongly opposed by its majority shareholders. The drama harks back to the 1970s when an official diktat to increase local ownership led to Coca-Cola's KO.N exit from the country. The latest struggle may redraw the boundaries for private enterprise in India. 
Tata Sons' board led by N. Chandrasekaran favours a listing. But charities collectively known as Tata Trusts, owners of 65% of the private holding company, argue that going public would dilute the group's philanthropic focus. Trusts Chair Noel Tata on Thursday said that its commitments in sectors like electronics manufacturing and civil aviation require "patience measured in decades rather than in quarters".
Like other conglomerates, the 158-year-old Tata group has long aligned itself with New Delhi's policy goals. What's different under Chandra's leadership is a commitment to so many capital-intensive, long-gestation projects at once. It privatised Air India in 2022 and struck out into iPhone assembly and government subsidy-backed semiconductors, going so far as to promise a chipmaking facility in the geographically tricky north-east of India. Tata Power TTPW.NS is targeting a 2032 launch for its first nuclear plant as India tries to cut dependence on energy imports.  
Although the Trusts signed off on these decisions, this huge commitment to national development appears to have emboldened officials to try to stake a claim in the group's corporate structure. One motivation may be to avoid a credit default at engineering and construction conglomerate Shapoorji Pallonji group, whose ability to honour its estimated 600 billion rupees ($6.26 billion) borrowings depends partly on its ability to monetise its 18.4% stake in the unlisted Tata Sons.   
Take the Reserve Bank of India. The regulator introduced rules in 2022 mandating large companies registered as core investment companies, a category of non-bank lenders, to go public within three years. The following year Shanghvi Finance, a firm backed by Sun Pharmaceuticals SUN.NS founder Dilip Shanghvi, applied successfully to remove itself from that category. Tata Sons tried the same route, but the RBI on September 11 rejected its request, baffling much of the financial community. 
The conduct of India's courts is also under scrutiny after Maharashtra state's quasi-judicial regulator for charities barred trustees at Sir Ratan Tata Trust, one of Tata Sons' main shareholders, from holding meetings while it determines the legality of the Trust's current board composition. This complicates the Trusts' ability to block Tata Sons' move last week to re-appoint Chandra for a fresh five-year term, which the Trusts have called "illegal".    
The boardroom coup tramples the idea of shareholder supremacy, a view reiterated in unusually scathing terms on Friday by India's top proxy advisory firm IiAS. It all adds to an impression of the Indian state bearing down with full force to call the shots at a private company. Whether or not that is the case, the widespread perception is highly damaging. Unlike Coca-Cola, the Tatas can't quit India. But proof of creeping nationalisation would ring an alarm for those who can.
Follow Shritama Bose on LinkedIn and X.
     
CONTEXT NEWS
Tata Trusts Chair Noel Tata on September 17 said the Tata conglomerate must explore all options to avoid a listing of its holding company Tata Sons. 
"If Tata Sons is publicly listed, the rights of Tata Trusts as majority shareholders stand to be seriously impaired," he said at a Tata Sons board meeting, according to a statement from the Trusts which own 65% of Tata Sons. 
Noel asked the board to engage with the Reserve Bank of India and seek a period of at least three years up to September 2029 to comply with a regulatory mandate to go public. He said it would take time to recast Tata Sons' articles of association and secure related shareholder approvals.
The RBI on September 11 turned down Tata Sons' request to deregister as a non-bank lender, making it mandatory for the company to go public and comply with the central bank's rules for large shadow lenders. 
The regulator also took the unusual move of pre-emptively approaching the Bombay High Court, seeking ​to be heard in any case filed related to the listing of Tata Sons, Reuters reported on September 15, citing an unnamed source directly familiar with the matter. 
Tata Sons on September 17 reappointed N. Chandrasekaran as executive chair for five years and said it would initiate steps to comply with the RBI's order. It reversed Chandrasekaran's decision on August 12 to not seek reappointment citing the absence of the board's unanimous support. Tata Trusts, which oppose a listing, dismissed the re-appointment as "illegal". 

(Editing by Una Galani; Production by Ujjaini Dutta)
((For previous columns by the author, Reuters customers can click on BOSE/shritama.bose@thomsonreuters.com))