A bitter power struggle is raging within the Tata Group . Barely a month after N Chandrasekaran, Tata Sons chairman, announced his decision to not seek an extension, the board of the holding company has approved another five year term for him. This dramatic turn of events came even as Noel Tata, chairman of Tata Trusts, opposed the decision . The Tata Sons board has, in other words, gone against its largest shareholder — Tata Trusts hold about 66 per cent stake in the holding company. These developments, rather than resolving differences, bringing a finality to the leadership question and placing the group on stronger footing, could well precipitate an institutional crisis. A protracted legal battle may ensue. This would be neither in the best interests of the group, its shareholders nor the larger economy. Internal conflicts in the group have been simmering for some time. Noel Tata and Chandrasekaran have reportedly had strong differences of opinion on several issues. The Tata trustees have themselves been at loggerheads. Parallels can be drawn of similar power struggles. For instance, when Ratan Tata took over as chairman he had eased out the powerful old satraps. The ouster of Cyrus Mistry as chairman of Tata Sons was equally bitter. But, there is another element to the recent boardroom machinations that will have far-reaching ramifications for the group. The board has also decided to pursue a public listing following RBI’s decision to reject Tata Sons’ application to surrender its registration as a core investment company. This decision too was opposed by Noel Tata, who has stated his intention to keep the company private. These matters are now likely to move to the annual general meeting where both the decisions will be put to the test. A prolonged period of ambiguity over leadership and the issue of public listing is undesirable and will raise questions over the functioning of the group. The questions that have arisen over leadership and succession, over the group’s governance structure, the limits of control, and the relationship between the trusts, the holding company and the operating entities, need to be clearly answered and resolved. The lines of power and accountability need to be clearly delineated and greater transparency in dealings and operations must be pursued. The group, which is engaged across a large spectrum of activities including areas of national importance, cannot afford a period of uncertainty and instability. The Tatas must put their house in order.
