Ramachandran Venkataramanan , the managing trustee of Tata Trusts — the principal shareholder of Tata Sons with a 66 per cent stake — is caught in the crossfire between former Tata Sons Chairman Cyrus Mistry and interim Chairman Ratan Tata. The usually reticent Mr. Venkat (as he is popularly known) has since emerged as the focus of attention, given the noise around the Trusts and their role in the Tata group.
Mr. Venkat is on the boards of Air Asia (India) Private Limited, besides serving as director of RNT Associates — Ratan Tata’s personal investment vehicle in start-ups. In an interview, he counters the allegations levelled by Mr. Mistry against the Trusts.
Do you think the current Tata-Mistry spat happened because the chairman of Tata Trusts and Tata Sons are different? In the past, they were the same.
Not necessarily. We have had different chairmen in the past. For example, Lady Navajbai Tata, Mr. Tata’s grandmother, was the chairperson of both the Trusts, but not the chairperson of Tata Sons. She was on the board of Tata Sons until her death.
Was it the trust deficit, then, between Tata Trusts and Tata Sons?
We operate businesses and life on trust and confidence, not necessarily on a legal contract. That doesn’t mean we are doing anything illegal. If you have to finalise the books of accounts of a particular company, you could say ‘Financial systems and processes do not exist’. It could be reworded to ‘There is a need to strengthen the financial systems and processes’. It means the same but the way you interpret it or deal with it makes a huge difference. If you have trust, you will say the latter. If you don’t have trust, you will say the former.
So what happened in Mr. Mistry’s case? The former or the latter?
In corporations, every person has reason to feel aggrieved about a decision. At the same time, one has to respect the overwhelming majority of the board.
Mr. Mistry’s exit did not come across as gracious...
Such a decision would have obviously been thought through by a person of Mr. Tata’s stature. Mr. Tata all his life has been an embodiment of grace and dignity. Would one ever think alternative routes weren’t suggested? A decision like this cannot be a sudden one.
What about the allegations that Mr. Mistry has made against the Tatas?
It is unfortunate that several myths that have been spread are seen to be taken as gospel truth. I will give you a few instances. One day you talk about that Mr. Tata wanted to sell TCS to IBM. Dr. Kohli, the person who co-founded TCS says it is absolute nonsense. One day you say Corus was a bad deal. Mr. Muthuraman who was the Managing Director at that time of Tata Steel gives a detailed explanation and then there is no convincing answer. A big claim is made against Diwan Arun Nanda and so and so and Mr. Arun Nanda gives an ad, after that there is no answer. I would request everyone to go on the basis of facts and not allegations that are not backed by any evidence.
Tata Group revenue is more than Rs.7 lakh crore, and profits would be more than Rs.70,000 crore. You spent Rs.800 crore or less than 0.5 per cent on philanthropic activities. This is similar to what Reliance Industries spends through Reliance Foundation set up some years ago.
The Trusts are concerned about Tata Sons and the dividends from Tata Sons. Whatever income the Trusts generate from dividend and otherwise, we spend 85 per cent or more towards the various philanthropic causes. We are not the philanthropic arm of the Tata Group – the parent company of Tata Group happens to be owned by Trusts, thanks to the benevolence of the founder and his children. As mentioned, we are mandated to spend 85 per cent of revenue which we do every single year. Eighty-five per cent has been in the range of Rs.750 crore – Rs. 800 crore, which we give back to society per annum and the rest 15 per cent is either for certain extraordinary expenses or saved for a rainy day.
Did you anticipate that Mr. Mistry will fight back after his ouster as Tata Sons chairman?
Quite frankly we did not expect this kind of backlash (in) the media, nobody expected this. Personally speaking, if I was an employee and asked to relinquish my current responsibilities for whatever reason by the overwhelming majority of the Board, I would do so and move on to do different things.
But he and his family hold more than 18 per cent stake in the hodling company, Tata Sons...
You should go back to the history of how this 18 per cent was acquired. A significant portion was acquired in the ‘30s as a part of the estate of F.E. Dinshaw. In 1991, when Mr. Ratan Tata took over, the value of Tata Group was $5 billion market cap across all companies. When Mr. Tata retired, the value of the group grew from $5 billion to $100 billion plus, 20x more..., which has beaten every single Sensex company.
As per information available in the public domain, one of the reasons for Mr. Mistry to be made the chairman was his family holdings in Tata Sons...
This is incorrect to the best of my understanding. The job was not given because of his shareholding, but it was despite the shareholding — it’s a statement and a fact.
The Trusts and Mr. Tata have been accused of interfering with business activities of Tata Sons. What are your comments on this?
It’s completely incorrect that we are managing Tata Sons. We are a philanthropic organisation and have no interest, not even remotely, in managing Tata Sons. Mr. Tata, post his retirement, had moved on to a different life altogether. As mentioned earlier, he was very active in the trusts; (he) has been very active in encouraging young entrepreneurs in the digital and e-commerce area with about 50-odd investments and had recently with Mr. Nandan Nilekani and Dr. Vijay Kelkar co-founded a financial inclusion vehicle. So, he has moved on to a different stage and age in life.If he wanted to control he wouldn’t have even retired. After all, he was the one who framed the retirement rules.
One of the allegations from your side is that dividends under Mr. Mistry’s tenure have fallen for Tata Trusts; this had been cited a possible reason for his ouster but data shows otherwise.
You have to look at the Tata Sons profitability sheet in the past 3-5 years. If one were to exclude the dividends from TCS and extraordinary income, Tata Sons has made an operating loss in the past three years. The Trusts are and have been concerned about Tata Sons. The dependence on TCS has increased and Tata Sons has given a detailed appeal to the shareholders elucidating these points and many more.
What has been the thrust of Tata Trusts after Mr. Ratan Tata retired from Tata Sons and devoted all his time to the Trusts?
One of the shifts that happened closer to Mr. Tata’s retirement was that he himself started applying his mind on what he would need to do to address a fundamental challenge. And, towards the last year of his chairmanship, he actively worked on the subject of combating malnutrition. I was part of his office assisting him in this endeavour. Subsequent to his retirement, this subject received a far greater focus — for we realised combating malnutrition is a far bigger problem than the young children alone — it involved the mother, the adolescent, behavioural changes, water and sanitation and the program became far more comprehensive that what we initially set out to achieve.
On what areas are the Trusts focusing?
The Trusts have begun to move away from a traditional donor role to taking on specific projects of national importance. In the area of nutrition for e.g., we were aware of a particular protocol thorough a compound called Encapsulated Ferrous Fumarate. This technology was developed at University of Toronto. No standards existed for fortifying salt with iron using this standard. We worked with the University for technology transfer. We enabled that particular transfer, where the university said, if it’s for a public programme, we will transfer that technology for free.
How do the Trusts plan to commercialise the salt fortification?
We worked with the Ministry of Women and Child Development, Health and the Food Safety Standards Authority of India (FSSAI) to formally adopt and notify standards for fortification. These were announced on November 16, 2016 in the presence of Hon’ble Minister Ram Vilas Paswan. Several states are formally launching Double Fortified Salt using such protocols.
Fortification has been a practice globally. For example, many years ago, China found a way to embed micro-nutrients in soya sauce because soya sauce is a staple food in China. India has always been privy to this sort of fortification, earlier. In the 80s, iodised salt came into being that way. Then it became a standard, over the years. Now, we hope that in the coming years, Double Fortified Salt (DFS) or fortified milk will be a mandatory standard. It is available in the market but the key difference is that today, Tata Salt sells DFS at a price of about Rs.28, beyond the reach of many people. What we are attempting to do from the Trusts is, we are agnostic to any company or any state. The price points in public programmes will be around Rs.10 or less.
It is on initiatives like this that Mr. Tata has been personally involved. Conceiving it, providing strategic direction and also, reviewing it, very periodically – some times more than a programme manager.
Are you doing any work on the digital front?
We are undertaking several interventions in the Digital front. One key initiative is our partnership with Google called Internet Sathi – helping women go online. We are today in about 9,000 villages in ‘Internet Saathi’. The target is to go to 18,000 villages by March 2017. Our joint target with Google, which should take between 18-24 months is reaching at least 100,000 villages. The starting point is helping people to get online and look at what digital can do to these respective areas, raising their awareness to various sources of livelihood and providing them access and awareness about government schemes and programmes. The second version of what we are attempting is, giving extremely curated content like say, financial literacy, and financial inclusion that is a big push for the government as well. We are in discussions with NITI Aayog and several State governments.
