Tussle: Tata Trusts ≠ Tata Sons

Disclaimer: The below article is a collection of news, reports, and information from reputed news channels and the press. This is not my personal view.

What is going on in the boardroom of India’s most respected industrial institution, Bombay House?

You could have noticed a lot of media discussions and heated arguments across India’s leading business and political news channels.

Before we deep-dive into the background, first let us see the two primary reasons for this disruption:

1. The RBI’s legal requirement that could force Tata Sons to be listed.
2. Reappointment of N. Chandrasekaran, popularly known as Chandra, the present Chairman of Tata Sons.

We will first see a quick background about the company’s structure and then go to the above said issues.

The Tata Group has businesses ranging from planes to salt, steel, watches, software, cars, electronics, hotels, and retail. The Group has 26 publicly listed companies, apart from several unlisted companies. Tata Sons has six directors. Chandra is one, Noel and Venu are representing the Tata Trusts and apart from them there are three more directors.

Tata Sons is the principal investment holding company and promoter of the Tata Group.

Who controls Tata Sons?

Unlike other traditional Indian conglomerates, the Tata structure is slightly different.

The ultimate holding company is controlled by Tata Trusts, not the corporate. There are several trusts, which together own roughly 66% of Tata Sons. The core principle of the Tata family is that wealth created through business belongs to society. Ratan Tata once said, “We generate wealth for the people. What comes from the people has to go back to them.”

The two major trusts are:

• Sir Dorabji Tata Trust: 27.98%
• Sir Ratan Tata Trust: 23.56%

Together, these two trusts own 51.54% of Tata Sons. Other Tata philanthropic trusts take the total ownership of Tata Trusts to roughly 66%.

The Shapoorji Pallonji Group owns approximately 18.4%. It is the second-largest shareholder of Tata Sons, also the minority shareholder. The remaining shares are held by Tata Group companies and other shareholders. Very nominal shares are held with the Tata family.

In simple words, Tata Trusts (in collective) owns the majority of Tata Sons. Tata Sons holds investments in and promotes the Tata operating companies.

Therefore, the person heading Tata Trusts naturally holds the upper hand when it comes to major matters involving Tata Sons though they cannot directly control the day to day operations.

Presently, Noel Tata is the Chairman of Tata Trusts. Noel is the half-brother of the late Ratan Tata.

As of today, among the Tata family members, Noel Tata and his three children are the only family members actively involved in the Tata Group businesses. Ratan Tata’s brother Jimmy Tata is also alive, but he has never been active in the management of the group .Noel has three children, and all of them are associated with different Tata businesses.

There is a joke in sections of the Parsi community that Noel is a blessing to the Tata Group for the simple reason that he not only married but also has three children. :)

Because of the family complexities, Noel was always kept in the shadow of the business. One can even say he was kept away from the top position. He had a couple of opportunities to succeed Ratan Tata, but both times the position went to others, first Cyrus Mistry and later Chandra. Irrespective of the low profile, Noel Tata always maintains the integrity of the group in the public life.

Obviously, after the death of Ratan Tata, who was the Chairman of Tata Trusts until his last breath, Noel succeeded him.

Noel’s mother, Simone Tata, was from Switzerland. She played an important role in developing the one of India’s leading cosmetics brands — Lakmé.

Later, the Lakmé cosmetics business was sold to Hindustan Unilever. Simone Tata then helped establish the retail business that became Trent, which manages brands such as Westside and Zudio. Noel later played a major role in building Trent.

Now, back to square one.

First issue:

Tata Sons is a private limited company. Though it is a company, it does not mainly have an operating business. Rather, its primary focus is to invest money in the Tata Group companies and earn dividends. This dividends will be again pay to its promoters, including Tata Trusts, where the money will be spent on various philanthropic activities. This is the model of Tata Business.

For FY26, Tata Sons reported standalone revenue of approximately ₹42,367 crore (majority of them are dividends from tata group companies) and profit after tax of around ₹31,961 crore.

In technical terms, it is an NBFC, or Non-Banking Financial Company.

Within the NBFC category, it is classified as a Core Investment Company, or CIC. This is a category for companies whose primary objective is to invest in group companies and earn income from those investments.

One of the important conditions for a CIC is that at least 90% of its net assets must in the form of investment nature the in group companies. Further, at least 60% of its net assets must be invested in the equity shares of group companies.

Tata Sons has more than this 90% ratio.

RBI classifies NBFCs into different layers under its Scale Based Regulation framework as follows:

1. Base Layer consists of smaller NBFCs with relatively lower systemic risk.

2. Middle Layer consists of larger NBFCs that are subject to tighter regulation, but there is no requirement for them to be listed.

3. Upper Layer consists of a select group of systemically important NBFCs identified by RBI for enhanced regulatory oversight because of their size, interconnectedness, and potential impact on the financial system.

In 2022, RBI placed Tata Sons in the Upper Layer of NBFCs. Unlike the lower and middle layers, Upper Layer NBFCs are generally expected to list within three years. Therefore, the listing issue arose not because Tata Sons was a CIC or because of the 90% investment requirement, but because it was classified as an Upper Layer NBFC ( net investments of 1 lakh crore & more).

To put the size in layman’s language, especially being from Tamil Nadu, the amount is comparable with the scale of some of the largest local conglomerates, such as the Murugappa and TVS groups.

Tata Sons wanted to remain private. The reason being public listing could expose the holding company to quarterly market pressure, change its ownership structure, bring outside investors into the decision-making process, and affect the long-term charitable character of the group.

Second issue: Chandra’s reappointment

Chandra is about to complete ten years as Chairman of Tata Sons by February 2027.

During 2025 and 2026, there were multiple discussions in the Tata Sons boardroom about whether there was a need to reappoint Chandra.

When it comes to the numbers, the group has grown multifold under Chandra in terms of revenue, profit, and market value.

• Aggregate revenue: Reached ₹16.24 lakh crore in FY26, approximately 2.1 times the FY20 level.
• Profit after tax: Reached approximately ₹1.71 lakh crore, around 5.4 times the FY20 level.
• Market value: The combined market value of the listed Tata companies was approximately $277 billion as of March 31, 2026.

There is also another side.

There has been severe cash burn in some of the unlisted companies. The major one is Air India, followed by Tata Digital, Tata Electronics, and other new ventures.

Noel was reportedly asking Chandra for the strategy and future plans for these companies.

The primary concern from Noel was that Tata Trusts is the ultimate holding entity and needs money for philanthropic purposes. Losing money continuously in these ventures could reduce the dividend available to Tata Trusts and, in turn, affect its charitable activities.

A lot of debates were part of this.

At one point, Chandra was reportedly frustrated with these discussions. He voluntarily announced that he would not offer himself for reappointment in 2027.

To be careful, he did not say that he would immediately retire or resign. He only said that he would not participate in the reappointment process.

Yes, this is what Noel and the Tata Trusts board may have wanted.

Chandra conveyed his decision to the Tata Sons board. The matter then moved towards the Nomination and Remuneration Committee, or NRC, and Tata Trusts asked the NRC to began preparing for succession planning.

The NRC plays an important role in reviewing Chandra’s performance and his appointment/re-appointment formalities.

Venu Srinivasan is one of the members of the NRC. Therefore, he has a role in matters relating to Chandra’s performance, salary, and extension.

Tata Trusts would have believed that all the issues had been resolved.

But there was a U-turn from the RBI.

RBI rejects Tata Sons’ request

As discussed above, the RBI classified Tata Sons as an upper-layer NBFC, which could require it to be listed.

Tata Sons submitted an application to surrender its CIC registration after repaying more than ₹21,000 crore of its standalone debt.

Under the earlier understanding of the RBI guidelines, a company that does not hold or access public funds (loans and debt) may have grounds to seek cancellation of its NBFC registration.

By wiping out its standalone debt, Tata Sons argued that it was no longer using public funds and should be allowed to operate as an unregistered private holding company.

However, the RBI rejected the application in September 2026.

Reports have given different explanations for the RBI’s rejection. One reported view was that even if Tata Sons had zero standalone debt, its wider group companies continued to access the market.

Based on this, the Tata Sons board also took a U-turn.

The September 17 board meeting

The Tata Sons board through NRC asked Chandra to reconsider his earlier decision not to seek another term in lieu of RBI’s rejection. Chandra agreed.

On September 17, 2026, Tata Sons held an important board meeting.

The discussion covered the RBI’s rejection, the possible listing of Tata Sons, and Chandra’s reappointment.

It looked like Noel was polite in the board meeting and had prepared himself to convince the board, especially on the listing matter.

He recommended that the board seek an extension from the RBI for listing and proposed certain other ideas if the RBI was not willing to accept the request.

The board had a different plan.

As of now, both parties are in a strong position in different ways, even though most of the Tata Sons board is against Noel’s position.

Noel was not new to business. However, he had mainly stayed within a few selected businesses in the Tata Group.

Ratan Tata always kept some distance from Noel, both personally and in the corporate life. This has been discussed in the media. Noel did not have the same political relationships or corporate connections as Ratan Tata.

He was also relatively new to the Tata Sons board and had become Chairman of Tata Trusts only after Ratan Tata’s death.

The board then voted on his reappointment for another five years after his current term ends on February 20, 2027.

Four directors voted in favour of his re-appointment except Noel Tata voted against the proposal. Chandra did not vote on his own reappointment.

Therefore, the result was 4–1.

There is also a rumour that Noel convinced Venu not to attend or asked him to vote against Chandra. Not sure about this.

Though there was a clear numerical majority, Noel argued that the required majority among the Trust-nominated directors was not there which is per the articles of association (AoA). The AoA provides that, for certain reserved matters, approval is not based solely on a simple majority of the board. It also requires the consent of a majority of the directors nominated by the Tata Trusts. Therefore, according to the Tata Trusts, the decision was not valid since Noel and Venu (nominated directors from the Tata Trusts) voted each other in a separate direction.

Tata Trusts called the resolution a “legal nullity.”

The other side argues that the resolution was validly passed by the board under the Articles and the applicable law. Tata Sons reportedly relied on multiple legal opinions to support its position.

There are, therefore, a lot of legal interpretations around this.

But one thing is clear.

Though the Tata Sons board approved Chandra for another five years, shareholders approval is still relevant.

In the AGM, Tata Trusts would have the upper hand because approximately 66% of Tata Sons is owned by the trusts.

But there is a catch on AGM!

Sir Ratan Tata Trust and the AGM

Out of the 66% held by various Tata Trusts, Sir Dorabji Tata Trust holds 27.98%, while Sir Ratan Tata Trust holds 23.56%. Together, they hold 51.54%.

The Maharashtra Charity Commissioner placed restrictions on Sir Ratan Tata Trust, or SRTT, from convening trustee meetings or passing resolutions while proceedings concerning its board composition were pending.

The issue was triggered by complaints regarding the number of lifetime or perpetual trustees under the amended Maharashtra public trust law. Reports stated that Venu Srinivasan was among those who raised a complaint.

Under Tata Sons’ Articles, SRTT and Sir Dorabji Tata Trust must jointly nominate a representative to fulfil the required quorum for the AGM.

Without SRTT being able to hold a meeting and participate in the nomination process, the required quorum could not be completed.

This was first in the history of Tata Sons that the AGM was postponed due to the lack of quorum.

As a result, Tata Sons’ AGM scheduled was adjourned.

Therefore, without the restriction being lifted, modified, or otherwise resolved, the AGM cannot proceed normally.

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And it may take a longer time.

With this, the two major issues causing the battle have been explained.

Everyone thought on similar lines.

But there are a couple of demons.

The business transaction involving Chandra’s family and TVS Motors

The first one is the business transaction between Chandra’s family business and TVS Motor.

A few days after the September 17 meeting, Mint reported the matter. It appears Mint spent around eight months identifying and reviewing this issue.

Chandra’s wife, Lalitha Chandrasekaran, and his son, Pranav Chandrasekaran, are directors of a company called Hanno One Warehousing Private Limited, which was incorporated in March 2025.

Hanno Infra LLP owns 99.99% of Hanno One. Lalitha signed on behalf of Hanno Infra, while Pranav owns one share directly.

Three months after the incorporation, TVS Motor leased approximately 17 acres of land in Krishnagiri, Tamil Nadu, to Hanno One for constructing a warehouse facility.

Mint reviewed the transaction, including the financing documents. HDFC Bank offered Hanno One a construction loan of ₹60 crore for the project, which was estimated to cost approximately ₹106.3 crore.

The land records and stamp documents were also reportedly verified through government records.

Technically, Chandra is not involved in these companies as a director or shareholder. But his family is.

If the transaction had been directly with a Tata Group company, the related-party angle would have been more direct.

However, TVS Motors is an independent listed company and not a Tata Group company.

Still, there is a catch: the Tata Code of Conduct.

The Code requires the disclosure of actual and potential conflicts of interest. It covers situations where an employee, director, or their family may have a transaction or relationship that can influence, or appear to influence, decisions made for a Tata company.

Ideally, Chandra is the Chairman of the Tata Group’s holding company. His family is involved in a business transaction with TVS Motor, where the Chairman Emeritus, Venu Srinivasan, is also:

• Vice-Chairman of Tata Trusts
• A nominee director of Tata Sons
• A member of the NRC
• A director who supported Chandra’s reappointment

Chandra disclosed the formation of Hanno One in April 2025 to the companies where he served as Chairman. However, according to reports, the specific TVS Motors transaction was not separately disclosed to Tata Sons.

Tata Sons’ position is that TVS Motors is an independent listed company and the specific transaction did not require separate disclosure.

Tata Trusts said Venu had not disclosed the transaction to its trustees. It also said that it would evaluate the nature of its institutional response if the reported allegations were established.

One can argue that Chandra did not need to disclose the transaction separately. Another person can argue that given Venu’s roles in TVS Motors, Tata Sons, Tata Trusts, and the NRC, it should have been disclosed more widely.

Therefore, this raises a potential disclosure and conflict-of-interest question.

With that, one more issue heated up the corporate arguments in India, over and above the first two issues.

Now, the fourth one came up just a few days before this post.

The proposal to merge TESS and TCE into Tata Sons

Noel was confident of challenging Chandra’s reappointment at the shareholder level, even though Chandra had clearly won the board’s numerical majority.

The other matter that Noel could not control was the RBI’s rejection of Tata Sons’ request to surrender its CIC registration.

Therefore, Tata Trusts prepared a plan to convert Tata Sons into a normal operating company.

We saw above that Tata Sons is mainly an investment company, and its primary objective is to invest in group companies and earn dividends and other financial income.

The plan is to change that.

Tata Trusts picked two unlisted companies in the group:

1. Tata Electronics Systems Solutions, or TESS
2. Tata Consulting Engineers, or TCE

Both are largely owned within the Tata Group structure.

Tata Trusts proposed that these two companies be merged into Tata Sons.

There are multiple benefits:

1. Tata Sons will be no longer be only an investment company.
2. It will have substantial business operations.
3. The operating revenue of the two businesses, together with the combined structure, would be approximately ₹1.05 lakh crore as of March 31, 2026.
4. Tata Sons would become an operating company, and dividend income would no longer be its major source of revenue.
5. Because of the merger, the total net assets of Tata Sons would increase.
6. Its investments in group companies as a percentage of total net assets could fall below 90%.

According to Tata Trusts’ proposal:

• Investments in group companies would be approximately ₹1.77 lakh crore.
• Total net assets would be approximately ₹2 lakh crore.

With all the accounting happening, the ratio would come below 90%.

So now Tata Sons would have the following factors:

1. It would become an operating company, which is the first reason for coming out of the NBFC classification.
2. Dividend and other financial income would be pushed to the side because operating revenue would become larger.
3. Investments in group companies would not be 90% or more of total net assets, and therefore Tata Sons could argue that it is no longer a CIC.
4. Tata Sons already does not have public funds on a standalone basis after repaying its debt.

These are only proposals from Tata Trusts to Tata Sons.

The Tata Sons board must review and approve the proposal.

This should not automatically be called an illegal evasion of the rule. It is better described as an attempt to restructure Tata Sons so that it no longer meets the conditions that bring it under the NBFC and CIC classifications.

If the board rejects it, Tata Trusts may try to use its majority shareholding at the shareholder level.

Therefore, on both Chandra’s reappointment and the merger proposal, Tata Trusts has the upper hand at the shareholder level, provided it can overcome the AGM and quorum issues.

However, there are limits to what Tata Trusts can do:

1. To conduct the AGM, the restriction on SRTT must be lifted, modified, or otherwise legally resolved.
2. If Tata Sons accepts the merger, it may require approvals from the boards of the merging companies.
3. Shareholder approval may be required.
4. The merger may have to go through the National Company Law Tribunal.
5. Other regulatory approvals may also be required.
6. Most importantly, the RBI must accept the revised structure and allow Tata Sons to surrender its CIC registration.

Even if all the normal board, shareholder, and NCLT approvals are obtained, the God, RBI, has to accept it.

Only then can Tata Sons get rid of the listing requirement.

That is not in Noel Tata’s hands unless he has a good lobby in Delhi.

Delhi is watching

As of the date of writing, reports stated that both Noel and Chandra had met senior members of the Union government, including ministers and the Home Minister.

Social-media reactions

By the time I am writing this, a lot of social-media discussions and gossip have already started floating.

I have been following this issue for close to a month. From last week, I have been seeing a lot of posts and feeds from members and accounts associated with the Zoroastrian and Parsi communities in India saying:

• “Protect Tata.”
• “Tata has to be ruled by Tatas.”
• “Save Tata from minority directors and professionals.”

One post also explained that some of Chandra’s close relatives are spread across the Tata Group in influential positions.

At the same time, in Tamil Nadu, there was a sensational post from a Congress state leader alleging that the Chairman was using his position to take control of the group. He deleted the post soon afterwards.

Badri Seshadri of Kizhakku Pathippagam reportedly made an interesting argument. He said that Tata reached this stage because of professional management over the last ten years.

Surprisingly, he said Chandra was a good Chairman for Tata.

Chandra’s appointment made him the first non-family professional insider to rise through the Tata system and reach the very top of the holding company without holding any stakeholder legacy.

What is happening now?

• A tussle between the Chairman and his supporters on one side and the parent shareholder on the other.
• A tussle between the owner and the directors.
• A dispute over whether Tata Sons must be listed.
• A possible disclosure issue involving Chandra’s family business and TVS Motor.

For the answers, we need to wait until:

• The restriction on SRTT is lifted or resolved for conducting AGM
• Approval over Chandra’s reappointment
• Approval over the merger proposal across all the three boards.
• The RBI accepts or rejects the proposed restructuring.
• Tata Trusts decides how to respond to the TVS-Hanno disclosure question.

By the time I’m posting this article, there are couple more news have comes up.

1. Venu Srinivasan filed a complaint with the commissioner of charity that he was not consulted on the proposals merger that Noel presents to the Tata sons board
2. There is one more transaction between Chandrasekaran’s family business and TVS motors. Hanno one bought a land of 35 acres in Mysuru and it was specifically approved to build an industrial park for auto component manufacturing supply explicitly dedicated to serving TVS Motor and its Tier-1 suppliers.

Fingers crossed. Wait and watch.

By the time I’m posting this article, there are couple more news have comes up.

Venu Srinivasan filed a complaint with the commissioner of charity that he was not consulted on the proposals merger that Noel presents to the Tata sons board.

There is one more transaction between Chandrasekaran’s family business and TVS motors. Hanno one bought a land of 35 acres in Mysuru and it was specifically approved to build an industrial park for auto component manufacturing supply explicitly dedicated to serving TVS Motor and its Tier-1 suppliers.