The Tata Group, one of India’s most prestigious business empires, is confronting a renewed boardroom crisis as trustees clash over control and strategic direction, threatening the stability of the $328 billion conglomerate amid significant operational challenges.
This power struggle has been brewing for months, with internal divisions among trustees forcing the Indian government to mediate and prevent a recurrence of the public legal disputes that followed the ouster of former chairman Cyrus Mistry in 2016. Recent reports indicate that Mehli Mistry, a close associate of the late Ratan Tata, has been removed from his position as a trustee, though this has not been independently verified. The core issue revolves around fundamental questions of governance: how much influence the philanthropic Tata Trusts, which hold a 66% stake in the unlisted holding company Tata Sons, should exert over commercial decisions.
Experts describe the conflict as a resurfacing of unresolved tensions inherent in Tata’s unique ownership structure. While the trust-based model has provided tax advantages and enabled charitable activities, it has also created governance challenges by blending non-profit and profit-driven objectives. The current rift centers on disagreements over board nominations, funding approvals, and particularly the potential public listing of Tata Sons. The SP Group, Tata Sons’ largest minority shareholder with an 18% stake, is aggressively pushing for an initial public offering, arguing it would unlock shareholder value and improve transparency.
However, most trustees oppose the idea, fearing that going public would dilute their decision-making power and subject the company to short-term market pressures, especially as Tata ventures into nascent businesses like semiconductors and electric vehicles. This internal discord comes at a precarious time for the conglomerate, which is grappling with multiple operational crises. The group is still recovering from a tragic Air India crash in June that complicated its efforts to revive the airline, and a September cyber-attack on Jaguar Land Rover forced a five-week production shutdown in the UK, reducing car output to a 70-year low.
Additionally, Tata Consultancy Services (TCS), the group’s flagship IT firm that contributes nearly half of its revenues, faces its own struggles, including mass layoffs and the loss of a billion-dollar contract with Marks & Spencer. These challenges have compounded the reputational damage from the boardroom battles, with public relations expert Dilip Cherian noting that investor confidence is being eroded by the uncertainty over who holds real power within the organization.
Historically, Tata has weathered similar governance storms, such as the fierce battles in the 1990s during Ratan Tata’s modernization drive and the very public fallout from Mistry’s removal. However, University of Maryland historian Mircea Raianu points out a critical difference: in past crises, strong-performing subsidiaries like TCS or Tata Steel provided financial stability, but with TCS now under pressure, the group lacks a reliable anchor to cushion internal divisions.
Amid the turmoil, Tata Sons chairman N. Chandrasekaran has had his tenure extended, and he continues to lead the group’s operations, though the trustee conflict remains a distracting backdrop. While the immediate outlook appears destabilizing, Raianu suggests that if the group navigates this crisis successfully, it could emerge with a more robust and transparent governance framework, potentially strengthening its long-term resilience and legacy.