How Mehli Mistry fits into the puzzle of Tata succession plan| Roadsleeper.com

The Tata family, close and extended, will eventually control the all-powerful trusts and through them the group’s vast business interests. Mehli, who is 62, and Noel, 65, are slightly younger than Vijay Singh, Venu Srinivasan and RK Krishna Kumar, the three other professional trustees on the Sir Ratan Tata Trust’s board. But their greatest virtue is clearly their lineage and their loyalty to Ratan Tata. Mehli, in fact, crossed the family line when he opposed his cousin Cyrus and threw in his lot with Tata during their board fight.

But it is this blurring of factors behind Mehli Mistry’s selection as trustee that raises the scent of confusion. From the vast pool of talent available to the nation’s most respected company, is he the best man available for the job? Remember, a Tata Trusts trustee wears two hats — participating in decision-making related to philanthropic endeavors and decisive in decision-making related to the operations of the group.

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Six years ago, Tata Sons ditched a formal search process and, at Ratan Tata’s urging, brought in the late Cyrus Mistry as group chairman. In that case, too, Mistry’s choice appeared to be guided by the need to have “one of us,” someone related, even tangentially, to the family, as head of the conglomerate. That exercise ended badly and led to a permanent break in the relationship with the group’s second largest, and so far most loyal, shareholder.

The Tata Group is now in its 154th year and in its fifth generation. That’s far more than most business families can hope to see without destroying themselves. Such large conglomerates eventually run into intractable problems, some of which simply do not have an easy solution. Ratan Tata’s succession issue is one such. In a perfect world, he would have a bunch of smart daughters and sons or even nieces and nephews to choose from. With N. Chandrasekaran firmly in the saddle as the professional chairman overseeing the running of the business, the chosen one would have slipped seamlessly into the role of elder statesman – regardless of her age – as head of the trusts. That option is simply not available and leads to the piquant situation we have now. Scarred by the bruising battle with Cyrus Mistry, the Tata family must maintain a firm grip on their sprawling business empire. That’s the easy part. The 67 percent the trusts have in the holding company ensures that, and with their boards controlled by handpicked members of the larger family, the business should follow suit.

The tricky part is the dynamic between the trusts and the holding company chairman. With the passing of the resolution barring the same person from heading the trusts and the holding company, Chandrasekaran can never wield the same kind of authority that Ratan Tata did when he juggled both positions to perfection. What happens when the trusts as majority shareholders and the chairman as head of the holding company differ on a crucial issue, such as the sale of Tata Steel?

When the Tata Foundations were formed nearly a century ago, their aim was solely to use the money they received for philanthropic purposes. In recent years, they have gone beyond the original charter to play the role that owners and the largest shareholders of family-owned businesses do. That’s what queers the plan somewhat. The best that can happen is that a Tata or his agents control the trusts and in turn are mindful of the grand business legacy that they have in their hands.

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