By Nidhi C Sai, Editor Online Production, with global Reuters staff
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Succession planning in Indian companies has shot up the list of concerns for investors after rearing its head again at one of the country's oldest and internationally best-known conglomerates.
Tata Sons will be searching for a new chairman after N. Chandrasekaran announced his decision last week to step down when his term ends amid tensions with its largest shareholder, reigniting a broader debate about how India’s biggest business houses transfer power.
What does a good corporate succession strategy really look like? Write to me at nidhi.csai@thomsonreuters.com
Also, scroll down to read the remarkable story of how a DNA test, 40 years later, revealed that two childhood friends were actually biological sisters.
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N. Chandrasekaran speaks at a ceremony for India's First AI-enabled Semiconductor Fab manufacturing facilities in Gujarat, March 13, 2024. REUTERS/Amit Dave/File Photo
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Growing up in Jamshedpur in eastern India, it was hard for me to not develop a soft spot for the Tata Group. The city, also known as Tatanagar, was built around Tata Steel, but the company's influence extended far beyond the factory gates, shaping schools, hospitals, parks and sports facilities. The Tata name resonated more with people as a civic institution than as a corporate brand.
That perception makes the latest developments at the salt-to-software conglomerate especially striking.
Chandrasekaran decided to quit as chairman after failing to secure board backing amid tensions with the Tata Trusts, putting succession at the centre of the 158-year-old group's future.
The Trusts own 66% of Tata Sons and are now setting up a committee to recommend his successor. Also read how Noel Tata is emerging as power broker in the group's succession.
But the bigger question is not simply who takes the chair. It is the rocky relationship between ownership and management in India's storied business group, where a charitable trust controls the holding company, while more than 30 operating businesses have their own boards and executives.
The disruption is familiar. Tata Sons ousted Cyrus Mistry as chairman in 2016 after his clash with group patriarch Ratan Tata. Now another chairman is leaving amid tensions with the controlling trusts.
Shriram Subramanian, founder and managing director of proxy adviser InGovern Research Services, says the episode exposes both a succession-planning and governance problem.
"There has to be a smoother, named, planned transition and handover," Subramanian said.
That may be the bigger lesson for Tata — and for India's corporate houses.
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India's biggest conglomerates are adopting their own ways of addressing the succession issue but the common thread is to keep the reins in the family.
Reliance has been gradually bringing Mukesh Ambani's three children into the business, appointing them to the board in 2023 and giving them leadership roles across its consumer, technology and energy businesses.
Adani has said he plans to transfer control to four heirs in the early 2030s, with the next generation already running key businesses.
The Birla group, too, has long relied on family succession, with Kumar Mangalam Birla taking over the Aditya Birla empire after his father's death and subsequently bringing in professional managers and expanding it.
But none of these is a template for Tata.
Reliance, Adani and Birla are businesses where the respective families are the controlling shareholders. Tata is different because ownership is largely held by philanthropic trusts while its businesses are run by professional managers.
But that difference makes Tata's succession challenge tougher, especially as the next leader will inherit a group facing tests ranging from Air India's losses to pressure over Tata Sons' potential listing.
For investors, the question is therefore not just who gets the Tata Sons top job. It is whether the board has enough independence to have a voice, whether professional managers have room to run the businesses, and whether there is a clear transition process.
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The Reserve Bank of India will close by August 31 its discounted forex swap facility for banks to hedge overseas deposits raised from non-resident Indians, a month earlier than planned, following robust inflows of more than $50 billion. Read this report by Reuters journalist Jaspreet Kalra.
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- Diageo has agreed to reformulate some of its most popular whisky and rum drinks in India after the country's food safety regulator objected to flavouring ingredients that it said breached regulations. In return, the regulator is expected to lift production bans imposed in some states, potentially resolving a dispute in one of the world's largest spirits markets, writes Aditya Kalra.
- India’s top automakers privately raised concerns over contaminants in E20 petrol, including chloride and moisture, which they said could hurt vehicle performance, despite publicly backing the government’s nationwide rollout. Read more in the report on the subject by Aditi Shah and Aditya Kalra.
- India is weighing wide-ranging health insurance reforms, including benchmark treatment rates and a nationwide claims exchange, as it seeks to improve transparency and rein in some of Asia’s highest medical inflation. Read this in-depth report by Ashwin Manikandan.
- India is considering restricting the amount of sugarcane used for ethanol in the season beginning October to boost sugar output and try to calm record prices, write Reuters journalists Rajendra Jadhav and Mayank Bhardwaj.
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Meena Geltink, 43, and Minal Tijssen, 44, meet after a DNA test revealed they were biological sisters, in 's-Hertogenbosch, Netherlands, August 11, 2026. REUTERS/Marta Fiorin
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Two Indian-born women adopted by Dutch families discovered they were biological sisters after a DNA test nearly four decades after they first met as teenagers.
They had been childhood friends who jokingly called each other “sis,” never knowing how literal the bond was.
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This newsletter was edited by Muralikumar Anantharaman, Editor, Global News Desk, in Singapore.
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