Tata Trusts Against Listing, Diverted Attention: Harish Salve To NDTV

The ongoing row in Tatas is not a Noel Tata versus N Chandrasekaran or even philanthropy versus going public, it is just the government putting Tata Sons on notice that they have to list themselves. This is what senior advocate Harish Salve, who is advising Chandrasekaran in the ongoing contest, had to tell NDTV today. 

In an exclusive interview with Editor-in-Chief and CEO Rahul Kanwal, Salve spelt it out. 

Asked if this was a fight over whether Chandrasekaran  gets another five years or if the group is in the middle of a much larger struggle over future ownership, governance and control, Salve said Tata Trust is a 270 billion dollar empire which is a national asset. "Our economy will be affected if something happens to Tata Sons," he said.

So "it is a recognition that a group of trustees who were hoping to control this 270 billion dollar empire have suddenly been put to notice by the government that sorry, that's not how it works. You have to list yourself," he said.

Amid the row over the listings issue, Tata Sons board had passed a resolution last week to re-appoint N Chandrasekaran as the chairman. Noel Tata, the chairman of Tata Trusts, which owns a 66 per cent stake in the conglomerate, had voted against the move. 

Salve said today the "real issue" is different. "The Tata Trust people have shifted focus to the board meeting instead of the real issue, which is bothering them...  The Tata Trust is against the listing of the company," he said.   

But the company, Salve made it clear, does not have a choice. Even when the Tata Trust owns 66 per cent of Tata Sons shares. 

"If the RBI says go list yourself, there is no use saying my shareholders don't agree. You have to list yourself," he said. That is where a new set-up begins: "If you list yourself, you have an IPO. With that IPO everything will get sorted out," Salve said. 

The ongoing tussle, the other side has also indicated, is about more than chairmanship. It is ethics and the company's legacy of philanthropy that's at stake. 

Senior advocate Abhishek Manu Singhvi, who is advising Tata Trusts and Noel Tata, called it Tata's "architecture and design" which is unique and the vision of Jamshedji Tata. 

He created this Tata Trust as a "set of philanthropic trusts who then have 66 odd per cent as a shareholder-owner of Tata Sons, which in turn controls and runs a series of Tata operating companies, each of which is gigantic-Tata Motors, Tata Steel, etc," he told NDTV in a related interview. 

Under this system, anything and everything which goes out of Tata Sons... to the extent of 66 per cent shareholding, must go only to a charitable philanthropic trust, unlike to a normal shareholder. These take the form of hospitals, universities, scholarships, and research, he said.

Salve, however, scoffed at the argument. 

"There is this very strange logic about we are on philanthropy and the mindset will change. Tata Sons is not a philanthropic company. Tata Sons is supposed to make as much money as it can so that the Trusts get as much money as they can for philanthropy. Philanthropy is at the Trusts. It is not at the Tata Sons stage," he said. 

About the possibility of the chairman appointment issue might inevitably end up in court, Salve indicated that it would not be wise. 

"Hope better sense prevails on both sides and nothing goes into the wash in the laundry. Because when things go into the laundry there is always some dirt which comes out. And the questions about Noel Tata's Irish passport, Dubai residence, all those issues -- nobody should go there,' he said. 

Chandrasekaran, he said, is a professional and the trustees supported a resolution appointing Chandra.

"Then differences came and when Noel Tata and Chandra couldn't work together. In the meanwhile Noel Tata has got I believe 16 or 17 out of 36 positions in the trust. So, you know, if all this goes into the wash all this will come out," he added.