Transcription
It has only been a year since the sad demise of Ratan Tata ji, and clouds of crisis have gathered over the Tata Group. There has been so much infighting among the board members that the government had to intervene. The trustees of Tata Trusts met Finance Minister Nirmala Sitharaman and Home Minister Amit Shah ji in Delhi on October 7th, requesting them to do something about our matter. But what exactly has happened in the Tata Group? Is this matter related to Tata Sons or Tata Trusts? What is the difference between Tata Sons and Tata Trusts? Who is the real owner of the Tata Group? What is the reason for this dispute? And how will this dispute affect other companies of the Tata Group? Is there no one left in the group after Ratan Tata ji who can manage the Tata Group? Why does the RBI want Tata Sons to come out with its IPO? And why does Tata Sons say that we will not bring an IPO? Why does the Shapoorji Pallonji Group, the second-largest shareholder of Tata Sons, want to exit the Tata Group by selling its shares? Your brother Rahul will explain all these things. There is talk of a dispute in the market. We will talk about three disputes. And what will be its impact on the stock market and your portfolio, we will know in this video. So, let's chant victory for the public and start the video. [Music] First, let's talk about the main dispute. But before that, let's understand who is the real owner of the Tata Group. Two entities come into this equation: Tata Sons and Tata Trusts. So, first, let's talk about Tata Sons. So, friends, whenever there is talk about the Tata Group, that the market cap of the Tata Group has crossed 30 lakh crore, the valuation of the Tata Group is more than Pakistan's GDP, there are more than 10 lakh employees in the Tata Group, the Tata Group is the country's most valuable brand. Whenever such things are said about the Tata Group, it is about Tata Sons. So, Tata Sons is the mothership that owns all other companies and is the custodian of all other companies. That is, all the companies you see, TCS, T Motors, Tata Steel, Titan, Tata Consumer (tea company), Tata Chemicals (salt company), Air India, Semiconductor, Defense, all these companies come under whom? Tata Sons. Who is the owner of all of them? Tata Sons. How many companies are there in total? More than 400 companies of Tata, which Tata Sons owns, and out of these more than 400 companies, 29 companies are already listed, and Tata Capital is going to be the 30th. So, 30 listed companies and 370 unlisted companies. Who is the boss of these 400 companies? Tata Sons. What is the role of Tata Sons? Tata Sons says, "Brother, I don't disturb you in routine work. For routine work, TCS has its own board. It has its own MD. Tata Motors has its own board. It has its own MD. But all the major strategic decisions, what will T Motors do after the next 5 years? What will TCS do after the next 10 years? In which new sectors should we enter? Should we enter the semiconductor sector? Should we enter defense? Should we do this? Who will decide to open a company in a new sector? Tata Sons. Who will arrange the money for opening that new company? Tata Sons. For example, earlier when Tata Steel and Tata Motors were running, with their money, they said let's open TCS. They arranged for it, and TCS grew. Now, with the money that came from TCS, they grew other companies. So, their job is to manage the subsidiary companies, collect their profits, nurture new companies, and make strategic decisions for them. For example, their main job is to manage old companies, collect their profits, promote new companies, and make strategic decisions for them. Clear? In short, this Tata Sons, which is called the Tata Group, is not listed itself. It is a private company that runs privately. The chairman of this Tata Sons was JRD Tata for 53 years, from 1938 to 1991. In '91, he handed over the chairmanship to Ratan Tata ji. Then Ratan Tata ji remained for 21 years until 2012. In between, Cyrus Mistry came for 4 years. Then there was a dispute, and Ratan ji returned for a year. And from '17 till now, N. Chandrasekaran ji is the custodian of this Tata Sons, who is a very old employee of the Tata Group and has been handling the chairmanship since 2017 after Ratan Tata ji. And under his chairmanship, the group's revenue has doubled in the last 5 years. Profit has tripled. Market cap has tripled. The group started work in semiconductors, defense manufacturing, iPhone manufacturing, all under his leadership. That is, there is no problem in Tata Sons during N. Chandrasekaran ji's tenure. So, you will ask, Rahul ji, if there is no problem, then what is the dispute? The dispute is that Tata Trusts is also the owner of this Tata Sons. Now, normally, it doesn't happen that a trust owns a company. But this is the Tata Group. The Tata Group said from the beginning that we are doing business for what purpose? We are doing business to earn money from business and to use that money for charity. To serve society. So, they said if the work is service, then the owner should also be a trustee. And all the troubles happening in the Tata Group right now are happening in Tata Trusts. Now, I will explain the basis of Tata Trusts, and then we will move on to the dispute. Now, who are the owners of Tata Sons? Listen carefully. There are four main categories. Number one: Tata Sons is owned by Tata Trusts, which holds 66% of its shares. Number two: The Mistry family, which you hear as Shapoorji Pallonji Group, owns 18% of Tata Sons' shares. Cyrus Mistry, who came after Ratan Tata ji, came because after the East India Company, the largest shareholder family in the Tata Group is the Shapoorji Pallonji or Mistry Group. Third: Various companies of the Tata Group hold shares in it, which is about 13%. And fourth: 2.85% shares are held by some individuals. Ratan Tata ji was among them, who held 83% of the shares. Despite being such a large Tata Group, why did Ratan Tata ji's name not appear in the Forbes list or among the richest individuals? He said all this belongs to the trust, it's not mine. He held such a small share. If he had a profit-making mentality, then these other people would not have stood in front of him. That's why Ratan Tata is great. So, for Ratan Tata ji, please like the video once. Then we will move towards the trouble. And who is the chairman of this Tata Trusts, which also owns Tata Sons? Noel Tata. Noel Tata became the chairman of this trust after Ratan Tata ji. The owner of all companies is Tata Sons, where N. Chandrasekaran ji is sitting. The owner of Tata Sons is Tata Trusts, where Noel Tata ji is sitting. Okay? Now, let's talk about the dispute in Tata Trusts. There were seven trustees in Tata Trusts some time ago. Seven. First, Noel Tata. Second, Venugopal Srinivasan, who is the owner of the TVS Group, is a trustee in Tata Trusts. Third trustee is Vijay Singh ji, who was an ex-Defense Secretary. Next is Mehli Mistry. What is Mehli Mistry? Let me tell you. Mehli Mistry was appointed to this board by Ratan Tata ji himself. He is a very close friend of Ratan Tata ji. He is a cousin of Cyrus Mistry ji, to write. But when their matter escalated, he supported Ratan Tata against Cyrus Mistry. That is Mehli Mistry. Then there is P. M. Jhaveri, who was the former head of Citibank Group. Then there is Jahangir C. Jahangir, who runs Jahangir Hospital. Then there is Darius Khambata, who is a senior advocate. As long as Ratan Tata ji was alive, who was the chairman of Tata Trusts? Ratan Tata. Who was the chairman of Tata Sons? Ratan Tata. So, there was no dispute between them. And their stature was so great, their respect was so high, that their word was their command. If they said, "Let's do this," then all the votes would fall on one side. That is, all decisions were unilateral; whatever Ratan ji said, it happened. No dispute, no issues. So, whatever Tata Sons had to do, Ratan Tata ji was also sitting in Tata Sons, and then Tata Trusts approved it. Ratan Tata ji was also sitting there. So, a dispute never happened in life. But now, after Ratan Tata ji, Noel Tata ji has come to Tata Trusts, who unfortunately does not have such a great stature that whatever I say will happen, and here his weakness was seen a bit, so the rest of the group started dominating. So, after Ratan Tata ji's departure, a rule came in the trust. The appointment of any trustee who is over 75 years old will be done annually through voting. They said, "Okay, it's normal, appointments happen every year, we'll do it, what's the problem? It's good. After 75, it should be like this." But now Vijay Singh ji is 77 years old. Seven days ago, his name came up for reappointment, so our Venugopal Srinivasan ji said in favor, and Noel Tata ji said in favor. Four voted against it, saying it won't happen. Now, when two are in favor and four are against, the motion is dismissed. So, finally, Vijay Singh ji had to resign and leave Tata Sons. On the other hand, the group of Mehli Mistry and these four said that we propose that in Tata Sons, which manages all companies, Mehli Mistry ji should be nominated as a board member. So, Noel Tata ji and Shiv ji canceled it, saying they won't allow it, and that's where the real dispute began. So, the Noel Tata Group, in which Venugopal Srinivasan ji and Vijay Singh ji were, is saying that this Mehli Mistry and these four people are forming a super board and trying to run the trust according to their own wishes. Mehli Mistry ji and they say, "Sir, we are called trustees by name, but they don't let us have our way. Noel ji makes all decisions according to his own wishes." So, it won't work like this. So, a deadlock has been created here: these four want things to go their way, and these three say things should go our way. This is the main dispute. Is there any problem in the companies? No. Is there any problem in Tata Sons? No. The problem is at the top. So, what will happen because of this? A lot will happen, brother. See, routine work will not be disturbed. Normal work will continue because they have their boards and their MDs. But all the strategic decisions, like suppose now Tata Sons has to decide which new sector to enter. So, this group will say, "Let's enter solar." This group will say, "We won't allow it." Or this group will say, "Let's enter EVs." They say, "We won't allow it." So, in which new sector to enter or not, there is a deadlock. There is no agreement. So, where will the Tata Group go, brother? Suppose a trustee has to be appointed in Tata Sons. This group said, "Appoint these four." This group said, "Appoint these two." Then how will work be done, brother? Here sits the chairman of Tata Sons, N. Chandrasekaran ji. He has to make any decision, he goes to the board. Now, N. Chandrasekaran ji says, "Whom should I go to? Whom should I keep happy? Whom should I displease?" If I listen to them, these people will be unhappy. If I listen to these people, they will be unhappy. Brother, you should unite. Otherwise, if I listen to them, they will create trouble. If I listen to these people, they will create trouble. And if groups start forming here, then people will also form their own factions in Tata Sons, and then factions will also form in the companies. It won't be about efficiency. It won't be about productivity. It will be about settling their own people, and then the entire group will be in trouble. And if this continues, then first, there will be tension in entering new sectors, tension in who to appoint, tension in which direction to go, tension in who to give loans to, who not to give, how much to give, everything will become a source of tension. Egos will be involved. And if the impact of this is seen in the Tata Group, the Tata Group is such a large group that it will damage the country's image, and if the Tata Group companies falter, the stock market will also falter. And that's why the government is concerned. So, it's not known why these four people from the group were called by Amit Shah ji and Nirmala Sitharaman ji. They went intentionally. But the government is involved. The government said, "Brother, whatever dispute you have, settle it down." Because not only you, but the entire Tata Group, the entire stock market, the entire country will bear the cost of your dispute, and we don't want that. This was the biggest dispute that is being discussed in the newspapers. Second dispute, which is not discussed much. Third dispute, which is discussed less, but can become big disputes in the future. Let's talk about that. The second dispute is with the Shapoorji Pallonji Group. See, we saw that Tata Trusts is such a large group, say 30 lakh crore, and in this 30 lakh crore group, the Mistry Group or Pallonji Group holds 18% shares. So, on paper, how much money is there? Net worth of 5400 crore. But the Shapoorji Pallonji Group is saying that, "Brother, this is only on paper." Tata Trusts is not allowing them to sell these shares, saying they won't sell. Then they say, "Okay, fine, don't sell. We will pledge these shares and raise money from somewhere else." So, Tata Trusts is also not allowing them to pledge, saying, "We won't allow it, sir." Now, the Shapoorji Pallonji Group is saying that, "Brother, we have so many of our own huge debts in our companies. In our lives, we have assets worth 5 lakh crore. Let us do this freely." And they are not allowing it. The question is, why are they not allowing it? So, when Tata Trusts was formed, about 150 years ago, it was written in the agreement that this Tata Group was formed with the purpose of serving society, not with a profit-first mindset, but with a nation-first mindset, with integrity, with honesty. So, we do things differently. Now, this mindset is ours, the Tata's. The Mistrys' mindset was there at that time. So, they said, "We will both remain. If a third person enters the market, say a foreign company or a businessman with a profit mindset, then our mission will be in trouble." So, neither the Mistry Group nor the Tata Group will sell their shares in this trust because if shares are sold, another person will come, and then there will be disturbance. Or if shares are pledged and the loan is not repaid, then it will go to someone, and then there will be interference. Therefore, it was written in the clause that this money will neither be sold nor be used as collateral for loans. So, the Shapoorji Pallonji Group is saying that we have everything, yet we have nothing. This dispute also arose when Ratan Tata ji was there. At that time, during Ratan Tata ji's tenure, a proposal came out that, "Okay, we won't sell to an outsider. Tata Steel will buy their shares, and we will decide a price, and we will buy your shares and give you an exit, without letting an outsider in." But that matter was dropped after Ratan Tata ji's departure. Now, another thing is coming up: this Shapoorji Pallonji Group, the group of Mehli Mistry and these four people, are quite close to each other. In fact, they belong to the Mistry family, among their cousins and siblings. So, Noel Tata Group is also worried that if these people lead and come forward, they might give an exit to the Shapoorji Pallonji Group or make some favorable rule for them. This is also a hidden matter that is not being discussed much. Now, let's come to the third dispute, which is directly with the government or the RBI. Now, see, Tata Sons is such a large group that there is a lot of inter-company lending and borrowing. It has taken loans from many group companies. It has given loans to many group companies. So, the RBI says that, "Brother, your transactions are so large. So, we consider you an Upper Layer NBFC because you are taking so much loan, giving so much loan. You are an NBFC in yourself." In 2022, they were considered an Upper Layer NBFC and told to list within 3 years. Tata Sons repeated its old refrain, saying, "Look, brother, we are not a normal company. We are not working for profit. Our mindset is different. Let us continue to operate privately as we are. Once we come into the public market, we will have to provide disclosures. We will have to comply. We will have to chase quarterly profits in this crowd. Plus, we make many decisions where there is no profit or loss. We make them based on charity. Then the market will see it negatively, that they did this and that. So, let us remain private. Don't put us in these troubles." For that, they said, "Why are you calling us an NBFC? We have a loan of 20,000 crore." That's why they repaid the 20,000 crore loan. They said, "As of today, Tata Sons has zero debt. Now we are not an NBFC. Please forgive us, sir." Also, the IPO of Tata Capital that came, they didn't bring that IPO at their will. Tata Capital said, "Yes, it's our will, we will bring it." It got caught in that rule. It got caught in this rule, so they said, "Okay, let's bring this one." But not Tata Sons, because Tata Sons is related to 400 companies alone. But the thing now is that the deadline has passed, September 25th. The RBI is silent. The RBI is not even saying, "Okay, you repaid the 20,000 crore loan. Now you are not an NBFC. We give you a clean chit. You don't need an IPO requirement." Nothing like that is being said. Nor is it saying, "You missed the deadline. How did you miss it? Bring the IPO, we will impose a penalty." Nothing like that is being said either. The RBI has maintained silence. This is a very big cause for concern that the RBI should say something. In the recent RBI monetary policy meeting, a journalist asked about the status of the Tata IPO. So, the RBI Governor said, "We don't talk about individual companies," and he deflected the question. So, now we are waiting for an official statement from the RBI, whether they will force them to go for an IPO or exempt them from the IPO requirement. So, brother, anything can happen in the Tata Group at any time today. Because the tussle of the trustees is on one side. The tussle with Shapoorji Pallonji Group is on another side. The tussle with the RBI is on another side. So, that's why they say, when someone great leaves, only then they are remembered. Think about it, all these disputes were present. But in the last 74 years, when JRD Tata ji was there for 53 years, or Ratan Tata ji for 21 years, no one dared to speak. Neither Shapoorji Pallonji said anything. Neither the RBI said anything. Neither did the trustees ever fight. This was their stature, this was their influence. And after their departure, in just one year, how is the game changing? Look. So, now the question arises: will Noel Tata ji be able to manage Tata Trusts the way JRD Tata and Ratan Tata ji managed them? Will Mehli Mistry, by operating like a super board, stage a coup in the trust? Will the SP Group get an exit or not? Will Tata Sons' IPO come or not? These are all questions that cast a big question mark on the future of the Tata Group. On behalf of myself and all Indians who love Ratan Tata ji and love the Tata Group, we hope that the disputes are resolved as soon as possible, and this Tata Group progresses further and works on big projects without tension. But what will happen, only the future will tell. But as updates come, your brother will bring videos on them. If you got information from the video or if everything became clear in your mind, tell me in the comment box. Like the video, share it, and pray for the Tata Group. We will meet again in the next video. Until then, thank you. Jai Hind and Happy Diwali. [Music]