Boardroom battle at Tata Group forces Indian govt to step in

Unprecedented govt move seems to have calmed rift, but truce may be temporary

- Rohini Mohan

A boardroom shakeup in Indian conglomerate Tata Group in early October threatened to destabilise the tea-to-semiconductors business house, prompting the government to intervene.

The government was so worried about the situation at the organisation - which accounts for an estimated 4 per cent of India’s gross domestic product (GDP) - that Home Minister Amit Shah and Finance Minister Nirmala Sitharaman met some of Tata’s top leaders in a closed-door meeting in Delhi on Oct 7.

The unprecedented government intervention seems to have calmed the internal rift. But analysts suspect that the truce is temporary.

Smooth decision-making at the Tata Group is crucial, given its involvement in ventures that dovetail with the government’s top economic priorities.

One example is its US$i1 billion (S$14.25 billion) investment in the country’s first semiconductor fabrication plant. It is also the only Indian manufacturer of Apple iPhones in the country.

The company’s internal feud became public earlier in October when the philanthropic trust that controls a majority shareholding in the Tata Group holding company rejected the reappointment of a board member who also happens to be a former defence secretary.

It exposed the underlying tension between two factions in the boardroom that itself stems from decades-old infighting between the Tata and Mistry families that control the shareholding.

The resolution of chronic differences will have a bearing on critical projects helmed by the US$368 billion group.

With the differences over governance and transparency among the members now in the public domain, Tata faces additional pressure to fix them soon.