Tata boardroom battle shouldn’t shake our confidence in the Tata trusts

Because as a catalyst for civil society and increasingly a platform around which global funders are coalescing, the Tata trusts are playing a critical developmental role


In the ongoing tussle between Ratan Tata and ousted Tata Sons Ltd chairman Cyrus Mistry for supremacy at the venerable 148-year-old group, Tata trusts have been unwittingly drawn into the battle. Photo: PTI
In the ongoing tussle between Ratan Tata and ousted Tata Sons Ltd chairman Cyrus Mistry for supremacy at the venerable 148-year-old group, Tata trusts have been unwittingly drawn into the battle. Photo: PTI

When the lions battle, the grass suffers. More the pity when the grass happens to feed scores of hungry children, while also providing the funding for thousands to go to schools. In the ongoing tussle between Ratan Tata and ousted Tata Sons Ltd chairman Cyrus Mistry for supremacy at the venerable 148-year-old group, Tata trusts have been unwittingly drawn into the battle. Indeed, if the present spat, possibly the first of its kind in the rich history of the group, were to impede in any way the work the trusts are engaged in, there would be a million more losers than just the immediate protagonists.

Even a cursory glance at the news releases on the website of the trusts gives an idea of the work they do. “Slum Soccer partners with Tata Trusts and Football Players Association of India for Homeless World Cup 2016”, “Parag Initiative and the Mumbai Litfest announce the Big Little Book Award”, “Tata Trusts and Government of Tripura introduce initiatives in healthcare and education to improve access through technology”, “Tata Trusts and Gilead sign memorandum of understanding to address viral hepatitis in India”.

It is the kind of work philanthropy-starved India desperately needs. What’s more, increasingly, from being a back-end provider of funds to non-government organisations (NGOs) and self-help groups, Tata trusts are now at the forefront of implementing new models of social work. Tie-ups in recent years with the University of Toronto for work in malnutrition, with the Massachusetts Institute of Technology (MIT) for work in areas like health, housing and water along with associations with global institutions like the Bill & Melinda Gates foundation as well The Global Fund, have seen it move further down the path of executing projects. By moving forward from the Fabian principles of its founders who believed in creating wealth to give back to the people to a more modern version of that wherein it brings its management and technological skills and strengths to complement its ability to provide capital support to do-gooders, the trusts are breaching the gap in India’s fledgling social sector.

In the din of the heated boardroom battle, what has been forgotten is that for nearly 125 years, these trusts have often been an oasis for the poorest and most deprived of Indians. The oldest of the trusts, the JN Tata Endowment dates back to 1892 and the youngest, The Tata Education & Development Trust, was set up in 2008. Their vintage and the funds they have made available point to their commitment. The Sir Ratan Tata Trust, for instance, was established in 1919 with a corpus of Rs 8 million, a considerable fortune at that time.

Those who have cast doubts on the work of the trusts should do well to check with the 3,500 school children who are fed daily through centralized kitchens in special schools in Mundbegaon and Kambalgaon in the tribal belt in Maharashtra.

In a 27 October story, Mint reported that earlier this year, the Trusts withdrew Rs3,951 crore by redeeming preference shares they held in Tata Sons. That these shares were redeemed about 10 years before maturity would indicate that not enough money was being generated through dividends to sustain their commitments, which might have prompted the alarm at the declining fortunes of some of the group companies.

The unusual structure of the holding pattern in the Tata group has in a sense led to the current situation. While that may be a matter of some debate, it shouldn’t deflect from the huge good that has emanated from that very structure. To put it simply: the trusts are the principal shareholders in Tata Sons and the dividend that accrues to them, is used to do positive good for society. There’s nothing complex or convoluted about that. So far, no one has raised any questions about the compliance standards of any of the trusts.

As a catalyst for civil society and increasingly a platform around which global funders are coalescing, the Tata trusts are playing a critical developmental role. Perhaps a time has come for the group to think of a way whereby these trusts, in many ways the raison d’être of the Tatas, are bullet-proofed against being drawn in the future into such messy situations.

Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.

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