After Ratan Tata | In Noel the Tatas trust

Tata Trusts anoints Ratan Tata's half-brother and Tata Group veteran Noel Tata as its Chairman. Experts say the move signals continuity at the country's oldest philanthropic institution

ISSUE DATE: Oct 28, 2024

It wasn’t just another meeting of the board of the 132-year-old Tata Trusts in Mumbai on October 11. Just two days ago, Ratan Tata, 86, the charismatic chairman emeritus of the Tata Group and chairman of Tata Trusts—the philanthropic giant that has a 66 per cent stake in Tata Sons, the holding company of the $165 billion (Rs 13.8 lakh crore) salt-to-software conglomerate—had passed away. The meeting, held a day after his state funeral, had a significant agenda—to decide on his successor at Tata Trusts. What followed was a “smooth transition”, as insiders would put it, with Noel Tata, 67, a trustee on the board and Ratan Tata’s half-brother, unanimously elected as the chairman.

“Noel Tata’s appointment signifies continuity,” says H.P. Ranina, Supreme Court lawyer and a close observer of the Tata Group for decades. “Noel has filled the void left by Ratan Tata’s demise. The trusts will continue to operate as they have done before.” But the significance of the ascent of someone who carries the Tata surname was too big to be missed. Born to Naval Tata, Ratan’s father, and his second wife, the Swiss-born Simone Tata (credited with building the Lakme brand, later sold to Hindustan Unilever), Noel has been associated with the Tata Group for over 40 years, currently serving on the boards of its various companies, including as the chairman of the retail arm Trent, the global trading and distribution firm Tata International, durables maker Voltas, and non-banking financial company Tata Investment Corporation. He is also the vice chairman of Tata Steel and Titan Company. “I look forward to carrying on the legacy of Mr Ratan N. Tata and the founders of the Tata Group,” Noel, who holds an Irish passport, said in a statement following his appointment.

Noel’s last executive assignment was as the MD of Tata International between August 2010 and November 2021, where he grew the company’s turnover from $500 million (Rs 4,200 crore) to over $3 billion (Rs 25,220 crore). Before this, he served as the MD of Trent for more than 11 years, overseeing its growth from a one-store operation in 1998 to over 800 stores across formats today. By marriage, he is also related to the Mistry family of the Shapoorji Pallonji Group, which has an 18.4 per cent stake—the second highest—in Tata Sons. His wife Aloo Tata is the sister of the late Cyrus Mistry—who had succeeded Ratan Tata as the Tata Group chairman in 2012 before being ousted in 2016. They have three children, Leah, Maya and Neville, all of whom are associated with the group companies: Leah with Indian Hotels; Neville with Trent, as the head of Star Bazaar, its hypermarket unit; while Maya reportedly played a role in the launch of the Tata Neu app.

Now, Noel will sit at the helm of Tata Trusts, with an executive committee under him to supervise its functioning. It comprises Venu Srinivasan, chairman emeritus of TVS Motor Company, and former bureaucrat Vijay Singh as vice chairmen; and Mehli Mistry, a close confidant of Ratan Tata and a cousin of Cyrus Mistry and Aloo Tata, as trustee. Siddharth Sharma is the CEO.

PHILANTHROPIC GIANT

The activities of Tata Trusts began with the setting up of the JN Tata Endowment for the Higher Education of Indians by Tata Group founder Jamsetji Tata in 1892. At present, Tata Trusts comprises two major trusts: Sir Ratan Tata Trust and Sir Dorabji Tata Trust, named after the sons of Jamsetji Tata and each housing several other trusts such as the Tata Education and Development Trust, Navajbai Ratan Tata Trust, Sarvajanik Seva Trust, Tata Education Trust and the JRD Tata Trust (see What Noel Tata Will Oversee). Spanning across sectors, including health, nutrition, education, water, sanitation, hygiene and livelihood, the trusts are estimated to have made donations worth over $102.4 billion (Rs 8.6 lakh crore) to philanthropic causes till 2021, as per the 2021 EdelGive Hurun Philanthropists of the Century report. In FY23, which are the latest figures available, Tata Trusts disbursed Rs 456.4 crore for various causes.

But what gives Tata Trusts its major clout is the sweeping powers it has over Tata Sons, being its largest shareholder. All major decisions of the group companies, including raising capital, buyback options or any change in articles of association (AoA), have to be discussed with the trustees. It also decides on the dividends it has to gain from group companies, which are diverted to various philanthropic activities. In FY24, Tata Trusts reportedly received its highest ever dividend of Rs 933.4 crore from Tata Sons, more than double the Rs 466.7 crore it received the previous fiscal. As per their 2023 annual report, the trusts distributed 48.5 per cent of their funds to healthcare, 16.9 per cent for rural upliftment, 16.5 per cent for education and 10.4 per cent to institutions and the remaining for water, urban poverty alleviation and energy.

Under Ratan Tata, say insiders, operations of Tata Trusts became “professionalised”. To begin with, the trusts moved out of Bombay House, the headquarters of the Tata Group. Now, they have a new premise at the World Trade Centre in Cuffe Parade. Then, a number of senior executives were appointed to handle various functions—finance, digital, human resources, partnerships and resource mobilisation among them—much like a company. Insiders say that the structure has been laid so well that Noel, who already has his hands full running other corporate affairs, will not find it difficult to fit into the groove.

WORTHY SUCCESSOR

“Both Noel and Ratan Tata have shared the same vision and the same wavelength,” says Ranina, who expects activities at Tata Trusts to gather momentum under its new chairman, since his predecessor had not been in good health and could not involve himself much with the trusts’ activities in recent years. “Noel is much younger, and will be able to play a much more active role,” he adds. “Things will work much faster, the trusts will become more agile and they will be able to take quicker decisions.”

Much before Ratan Tata’s retirement in 2012, there was speculation that Noel would be a frontrunner to succeed him. However, the Tata Group decided to constitute a search committee to hunt for a successor. For reasons unknown, Noel’s name was never put forward by the committee, which had Cyrus Mistry among others. After assessing some candidates, the committee felt that Cyrus would be the right person to lead the conglomerate. But he lost the board’s trust four years into his tenure, and was removed as chairman, paving the way for Tata Group veteran N. Chandrasekaran to take over.

In 2022, Tata Sons amended its AoA to ensure that the positions of chairman of Tata Sons and Tata Trusts remain separate, so that the leadership of the two entities could pursue independent goals. Moreover, whenever a successor has to be named, a selection committee needs to be appointed. “If the question of chairmanship of Tata Sons comes up when N. Chandrasekaran retires, the same process will be followed. The candidate can be a foreigner, an Indian, or part of the Tata family. If they find Noel Tata to be good enough, they may appoint him too,” says Ranina. Though for that, he’ll have to give up his position at Tata Trusts.

Insiders say that Noel is very hardworking, fully devoted to his job, has an informal demeanour, and makes sure the right decisions are taken. Like Ratan Tata, he is not one to socialise, but likes to spend time on his business interests. “He is the most prominent member of the Tata family in Tata Trusts or even in the Tata Group following Ratan Tata’s demise,” says a Mumbai-based analyst. “He may have lost his chance 12 years ago to head the group, but right now, there is hardly anyone else who can be named as a replacement for Ratan Tata at Tata Trusts. Moreover, his several decades of experience, both in group companies and for a few years at Tata Trusts, make him an apt choice.” That will be his biggest challenge too. All eyes will be on Noel as he steps into the large shoes of his illustrious predecessor.