In a significant shift within the Tata Group, Noel Tata was appointed to the board of Tata Sons on Friday (November 1). The announcement follows Noel Tata's recent appointment as chairman of Tata Trusts, the controlling entity of Tata Sons. The decision was reached via an online resolution during a virtual Tata Sons board meeting on Diwali eve, according to reports.

Noel Tata's appointment is important because he is the first family member since 2011 to serve on the boards of Tata Trusts and Tata Sons. Given the Tata Trusts' dominant 66% share in Tata Sons, this dual role heralds a new era of greater family management of the huge conglomerate's operations.

Transition and Governance in the Tata Group after Ratan Tata

Ratan Tata, who died recently, established a legacy of caution and expansion as chairman of Tata Sons and chairman emeritus of Tata Trust. His leadership ideas are likely to continue to shape the group, with Tata Trusts nominating one-third of Tata Sons' board of directors, according to the Articles of Association. This heritage continues as Noel Tata enters the governance structure, meeting with Tata Sons Chairman N Chandrasekaran to develop what sources describe as a "healthy working relationship."

The Tata Sons board today consists of nine directors: two executive directors, three non-executive directors, and four independent directors. Tata Trusts has appointed TVS Chairman Emeritus Venu Srinivasan and former defence ministry officer Vijay Singh as Tata Sons board members, in addition to Noel Tata himself. These individuals, along with industrialist Mehli Mistry, make up the executive committee that oversees Tata Trusts and determines the direction of Tata Sons.

A Demonstrated History of Leadership and Vision

Noel Tata's achievements in the Tata Group enterprises demonstrate his strategic approach to business growth and shareholder returns. Trent's revenue increased from Rs 2,333 crore in FY14 to Rs 12,375 crore in FY24, resulting in a profit of Rs 1,477 crore from a loss of Rs 19. Voltas' revenues increased from Rs 6,404 crore in FY17 to Rs 12,481 crore in FY24 during his tenure as chairman. Tata Investment Corp., which he also chairs, focuses on long-term equity investments, returning 705% over five years compared to 102% for the Nifty index.

As Noel Tata, aged 67, transfers into a non-executive role in accordance with the Tata Group's age restrictions, he is anticipated to add stability and consistency to the group's governance. Notably, there are no age restrictions for Tata Trusts trustees or chairpersons, allowing him to maintain his influence in the group's strategic decision-making without the restraints that apply to executive positions.