India's Tata Group is going through a major boardroom crisis. Noel Tata, the Chairman of the Tata holding company, has been removed from the Tata Group's board by N. Chandrasekaran, chairman of Tata Sons. Noel Tata has declared the decision illegal, a stance the board disputes. The crisis has been precipitated by a 2022 decision by India’s central bank to order the company to seek a stock market listing for Tata Sons, to comply with new rules governing systemically important investment firms. Tata Sons is considered an investment firm because it holds stakes in Tata subsidiaries and can inject capital into them. Noel Tata, who heads the bloc of charities that owns two-thirds of Tata Sons, vehemently opposes a listing.
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| Ratan and Noel Tata |
India's Tata Group is known for its deep philanthropic engagement in the country. Tata patriarch Jamsetji Tata, who laid the foundations of large-scale steel manufacturing in colonial-era India about a century ago, created trusts that would hold controlling stakes in the Tata Group, thus capping Tata family members' personal wealth. As a result of that decision, none of the Tatas' names show up among India's billionaires, even though the group's 26 listed firms had a market capitalization of nearly $280 billion in March this year. In recent weeks, the boardroom battle has dragged down the share prices of some group firms. The trusts receive hundreds of millions of dollars in dividends from Tata Sons. In the year ended March 2025, they spent more than $100 million on education, health and other social programs, according to the Wall Street Journal. Listing of Tata Sons as a public company could significantly reduce Tata Son's philanthropic spending.
Tatas are Parsees, a Zoroastrian minority that migrated to South Asia centuries ago. The Parsee community became very wealthy under the British Raj. They were licensed by the British colonial government to export opium to China and sell cotton to Britain when the American Civil War dried up supplies. These two activities helped them accumulate enormous wealth. But they have also used some of this wealth to fund charities. The Tata group was “conceived as national service carried on through business…and the structure of its ownership is what has allowed it to remain so,” Noel Tata has been quoted as saying at the board meeting.
Parsee community is also known for its philanthropy in Pakistan. NED Engineering University, my alma mater in Karachi, is named after a Parsee gentleman Nadirshaw Edulji Dinshaw (N.E.D.), who initially funded the institution at its founding in 1921. NED, now a university, still has reserved seats for Parsee students recommended by the Dinshaw family. I had several Parsee classmates when I attended it. In addition to reserved seats, Parsees also compete for admissions on general seats.
In 1925, Framroze Edulji Dinshaw of the Dinshaw family bailed out Tatas by loaning Rs 20 million to the Tata Group to rescue its troubled Tata Hydro and Tata Steel.
Some Parsee leaders, like Dadabhai Naoroji (1825-1917), participated in India's independence movement. Naoroji was among the founding members of the Indian National Congress and served as its President on three occasions, from 1886-87, 1893-94 and 1906-07. He was an early political mentor and major influence on Pakistan's founding father Quaid-e-Azam Muhammad Ali Jinnah during his formative years in public life. A major street that passes near Quaid-e-Azam Mohammad Ali Jinnah’s mausoleum is named Dadabhai Naotoji Road in Karachi.
Today, Tata is Apple’s only homegrown assembler of iPhones in India. The company faces heavy expenses from its efforts to turn around loss-making flagship carrier Air India, according to the Wall Street Journal. For now, Tata is heavily reliant on the profits of its cash cow, outsourcing firm Tata Consultancy Services (TCS).
Companies listed on public stock exchanges focus primarily on delivering short-term profits for shareholders and higher stock price, not for the benefit society at large. This is the main reason why Noel Tata is resisting pressure for listing his holding company. As he put it at the board meeting, the Tata Sons’ “dividends fund hospitals, universities and research for which no shareholder will ever be repaid. Its capital has repeatedly been placed at risk for reasons no analyst would have endorsed and from which the country has nonetheless benefited.”
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