How Mehli Mistry fits into the jigsaw of Tata succession planning

The Tata family, near and extended, would eventually control the all-powerful trusts and through them the vast business interests of the group. Mehli, who is 62, and Noel, 65, are slightly younger than Vijay Singh, Venu Srinivasan and RK Krishna Kumar, three other professional trustees on the board of the Sir Ratan Tata Trust. But his greatest quality is clearly his lineage and his loyalty to Ratan Tata. In fact, Mehli crosses the family line while opposing her cousin Cyrus and throws her lot during a boardroom fight with Tata.

But it is this blurring of factors behind the choice of Mehli Mistry as the trustee that only adds to the confusion. From the vast pool of talent available for the nation’s most respected profession, is he the best person available for the job? Keep in mind that a Tata Trust trustee wears two hats – participating in decision-making relating to philanthropic efforts and significantly participating in decision-making relating to the group’s business.

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Six years ago Tata Sons called off a formal search process and at Ratan Tata’s insistence, the late Cyrus Mistry was brought in as the group’s chairman. Even in that instance it seemed that Mistry’s choice was guided by the need for “one of us”, someone, regardless of family, as the head of the group. That practice ended badly, causing a permanent breach of the relationship with the group’s second-largest, and then-most loyal, shareholder.

The Tata Group is now in its 154th year and has entered its fifth generation. This is how most business families can expect to see without self-destruction. Such vast groups eventually face difficult problems, some of which do not have easy solutions. Ratan Tata’s succession issue is one such. In an ideal world they would have a bunch of smart daughters and sons or even nieces and nephews to choose from. As the professional chairman overseeing the operations of the business, N. With Chandrasekaran, the elder politician elected as the head of the trust – regardless of his age – would have basically slipped into the role. That option is not yet available and leads to the dire situation we have now. Panicked by a fierce battle with Cyrus Mistry, the Tata family needs to take a firm hold of their vast business empire. That’s the easy part. With the trusts securing a 67 percent stake in the holding company and their board controlled by elected members of the larger family, the business should follow suit.

The tricky part is the dynamic between the trusts and the chairman of the holding company. With the adoption of a resolution barring the same person from heading the trust and the holding company, Chandrasekaran could never exercise the same authority that Ratan Tata did when he combined the two positions for completeness. . What happens when the trust as the majority shareholders and the chairman as the head of the holding company differ on an important issue such as the sale of Tata Steel?

When the Tata Trusts were established nearly a hundred years ago, their aim was to use the money received for a purely philanthropic good. In recent years, they have moved beyond that initial charter to assume the role that the owners and largest shareholders in family-run businesses do. The same thing affects the pitch to some extent. The best it might be for a Tata or its representatives to control the trusts and in turn be mindful of the illustrious business legacy that they have in their hands.

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