The House of Tatas: Governance Challenges

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The House of Tatas: Governance Challenges

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Publication Date:
September 15, 2020

Source:
Indian Institute of Management-Bangalore

The case is based on one of India’s oldest, renowned, and most internationalized business groups. The case provides an account of the evolution of the Tata Group with an emphasis on the developments in the three decades following economic liberalization in 1991 and the legal tussle between Tata Sons (the Group’s parent company) and its minority shareholder (SP Group). The legal battle has potential ramifications on the evolution of corporate governance in India, a country marked by controlling ownership of corporations and concerns over protection of the interests of minority shareholders. Tata Group: Early History, the first section of the case, traces the early years of the Tata Group, its management philosophy, the formation of Tata Trusts, the leadership years of its long-serving legendary chairman, JRD Tata and the emergence of SP Group as a minority shareholder in Tata Sons. The second section, Ratan Tata Years begins with the elevation of Ratan Tata as chairman of the Group in 1991 and details the Group’s transformation through the institutionalization of formal systems and processes, entry into new industries, bold global acquisitions and radical innovations such as Tata Nano. Cyrus Mistry Years captures the key strategic choices made by the Group’s next chairman, Cyrus Mistry and his Vision 2025 for the Group. The next two sections, The October Shock and The Legal Battle, details the events leading to the abrupt removal of Cyrus Mistry as chairman of Tata Sons and ensuing legal battle between Tata Sons and Cyrus Mistry at the company law tribunals. Chandrasekaran Years provides details of the Group strategy under its current chairman, Chandrasekaran. The following two sections, The NCLT Order and The NCLAT Order captures the salient aspects of the contrary rulings of NCLT (in favor of Tata Sons) and NCLAT (which supported the claims of Cyrus Mistry). The final section, Postscript, briefly states the response of Tata Sons and Cyrus Mistry to ruling of NCLAT.

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The House of Tatas: Governance Challenges

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