Group firms collaborate with Tata Trusts

Tata Sons’ flagship firms had started collaborating formally with Tata Trusts, their principal shareholder, on corporate social responsibility (CSR) programmes as part of the One Tata approach being espoused by N Chandrasekaran, chairman, Tata Sons, and Ratan Tata, chairman, Tata Trusts, to streamline all charitable spending by the $103 billion group into one unified, powerful programme, said two people with direct knowledge of the matter. They declined to be identified.

As part of the plan, Tata Trusts has initiated a pilot with four Tata group companies, Tata Consultancy Services, Tata Steel, Tata Motors and Titan. The operating companies would create a common programme design along with Tata Trusts, which, in turn, would ensure that the entities no longer worked in silos for their CSR initiatives but collaborated with and leveraged each other’s strengths in their respective areas, one person cited above said.

In an email response, a spokesperson at Tata Trusts said, “Tata companies, from time to time, have chosen to work with Tata Trusts, of their own volition, on common interest areas.” This he added, helped pool expertise and resources to enhance impact. In addition to grant-making, the trusts’ approach now included direct implementation through deals with likeminded foundations, research institutions, and governments, he said.

“We have agreed on a common programme design,” said the person cited earlier, explaining that the entities would draw from each other’s strengths wherever required. “Eventually, the common man should benefit. There is no point in dissipating resources —human or financial,” he said, adding that earlier (under Cyrus Mistry’s chairmanship), every company started its own foundation.

“At this point, we are beginning to see a commonality. We have certain skill sets that the operating companies might not have. Having said that, we have only started with four companies and are not forcing ourselves on any firm,” he said.

Rajiv Agarwal, professor of strategy and family business at the SP Jain Institute of Management and Research, said while it was a good move, it should not come at the cost of high impact, low budget projects. “Everything will be lost if it has to go through the red tape and procedural requirements of corporate approvals," he said.

In his year-end note to Tata employees on December 27, Chandrasekaran wrote that as a conglomerate that had a presence in a myriad sectors with each presenting significant opportunity for growth, Tata companies needed to scale up through growth, consolidation and collaboration. The collaboration, he added, would also enable the Tata Trusts, which had been working in education, health care and technology to make a larger impact.

“It is also what the chairman of the trusts (Ratan Tata) and other trustees have been emphasising — to work together as one Tata unit,” said the person cited earlier. He, however, added that for the collaborative charitable initiative between Tata Trusts and Tata companies to work smoothly, the operating companies should start generating much more profit than what they were doing.

In its November 2016 press statement, Tata Sons had cited dwindling

dividend from the operating companies as one of the key reasons for removing Mistry as the chairman of the holding company.

It had said the drop in dividend income affected the holding company’s financial commitment towards its owner, Tata Trusts. On his part, Mistry has been refuting the allegations.

The investment firms controlled by the Mistry family have been fighting a case against Tata Sons in the National Company Law Tribunal over alleged mismanagement and oppression of minority shareholders at Tata Sons.