Tata Feud – There can be no questions about who is the leader

It is now a full one-month since the controversial meeting of Tata Sons in which Chandra was appointed as Chairman of Tata Sons for 5 years, despite opposition from Noel Tata. Till now, a long rope has been given to the dissidents; perhaps a little too long!

Two decisions and two standpoints

The unease between Chandra and Noel Tata was evident for a long time. In concrete terms, it boiled down to giving another term to Chandra and facilitating the listing of Tata Sons. The dissident board of Tata Sons has managed to bring in Chandra for another 5 years and is also working towards a listing of Tata Sons. The board of Tata Sons realizes that a listing should put immense pressure on the Tata Trusts. Noel Tata, on the other hand, is opposed to both these ideas. He wants Tata Sons to remain an unlisted entity and has called for a more intense debate on giving another term to Chandra.

Who is really calling the shots at Tata Sons?

That is the question that is really making investors and the markets uncomfortable. The Tata Trusts with 66% shareholding in Tata Sons is the majority owner by a margin. The most critical decisions have to be obviously taken by the majority owner, or by an appointed board, in alignment with the views of the majority owner. Anything that is out of sync with the majority owner view is dissidence. Make no mistake about that! Healthy debate is one thing. What we are seeing is open defiance. Noel Tata has, probably, been decent enough to tread carefully and move by the book. Probably, the time has come for Noel Tata to show who really has got skin in the game.

Dark irony of the governance custodians

One argument in legal circles has been that the current board of Tata Sons had brought in outsiders to ensure better debate and improved governance. That is hardly what we are seeing now. It emerges that Chandra and Venu Srinivasan had business linkages, which was never disclosed to Tata Trusts. That is breach of Trust. Venu Srinivasan was unfair in distribution of assets in his own house. How could he be fair in governance decisions of an external group? Eminent past leaders of Hindustan Unilever like Gopalakrishnan and Keki Dadiseth have held eminent positions with the Tatas. Only Manwani went on to trigger a rebellion. It is time for Noel Tata to act decisively now!

Doodh ki safedi versus samajhdari

Back in the 1980s, a big battle broke out between Nirma and Surf over detergents. Nirma played on emotion with Doodh ki Safedi at a low price. Eventually, Surf focused on hard reality; Kharidari mein Samajhdari. Why are we taking this analogy? For the Tata group, the emotional connect with the Indian people was always there and always will be there. It is about trust, history, care, and social responsibility. The time has now come for more tough decisions. A rebellion has to be quelled. That calls for wisdom; and wisdom lies today in hard decisions. Whey there are enemies at the gates, that has to be addressed on priority. It can be through persuasion, negotiation, or a display of authority!