Noel Tata warns listing Tata Sons could alter ‘Tata way of working’

With a crucial Tata Sons board meeting less than two weeks away, Tata Trusts Chairman Noel Tata on Saturday raised concerns over the possibility of listing Tata Sons, the principal holding company of the Tata group. He warned that such a move could fundamentally alter the way the conglomerate functions and potentially shift its priorities from philanthropy towards profitability.

“I fear that if the group listing happens, as some people have been suggesting, it could change the way Tata works. A day may come when we have 30,000-40,000 shareholders and profits become more important than philanthropy.

That will fundamentally change the Tata way of working,” Noel Tata said at the HT Leadership Summit. His remarks come amid discussions around the Tata Group’s ownership structure and the role of Tata Trusts in preserving the conglomerate’s legacy and governance framework.

Tata indicated that the Trusts would play a constructive role in engaging with regulators and other stakeholders to arrive at a solution that safeguards the group's existing way of functioning. The ownership structure and institutional character had helped preserve its values across generations, he said.

"The owner cannot die, the owner cannot be bought and the owner cannot retire. There is continuity in what happens the Tata way," he said. “I do not question the direction of what we have done. I question, sometimes, the delivery of what we are doing," he said.

"The question is, do we have the discipline when we execute projects, and not the direction? How will projects with a long gestation period succeed if we don't have discipline? And how will we allocate capital to those projects?" he said.

“Very clearly, the direction is fine, but we also need discipline in the execution of these very large projects," he said. "We are partners in India's development," he said, adding that the group was undertaking its first semiconductor project and setting up its first EV battery plant.

Noel Tata also spoke about his experience of taking over as chairman of Tata Trusts, saying the responsibility had given him a deeper understanding of the challenges faced by vulnerable sections of society. He said that although he had served as a trustee before becoming chairman, assuming the leadership role required him to understand the organisation's functioning at a much deeper level.

“One thing influenced me a lot and created a sense of humility within me. It was the opportunity to see the depth of problems faced by some sections of society and the opportunity to help the deprived people of the country.

This influenced me the most,” he said. Tata said his closer engagement with communities and the opportunity to understand their difficulties had been among the most impactful aspects of his experience as chairman. The experience had brought him face to face with the extent of social challenges in the country and reinforced the importance of the work undertaken by Tata Trusts, he said.

On Tata’s retail business, he said Zudio was launched in 2016 to cater to consumers at the bottom of the economic pyramid by offering aspirational products at affordable prices. "It was not that this aspiration for better products was only in the top metros or with the wealthy.

The aspiration went down all the way. How can we address in a way the bottom of the pyramid? In 2016, we launched Zudio to address this bottom of the pyramid with an aspirational product," he said. The format started with air-conditioned stores of around 6,000 square feet, with prices beginning at Rs 199, he said, adding that the starting price point had remained unchanged over the past decade.

Westside, which began with doubts over whether such a retail format could succeed in India, now operated around 320 stores and was looking at expanding to more than 500. On rising consumption, he said demand had increased across socio-economic categories and markets over the past decade.

The power struggle at the Tata Group has intensified following the September 17 Tata Sons board meeting, which exposed a deepening rift between the holding company’s board and its majority shareholder, Tata Trusts.