Bombay House battles: How Ratan Tata once defeated the old guard

N. Chandrasekaran's resignation as chairman of Tata Sons has brought internal tensions within the Tata Group into public view in a manner rarely seen in the conglomerate's history.

Reports of differences between Chandrasekaran and Noel Tata over governance, succession and strategic direction have revived memories of an earlier struggle that unfolded inside Bombay House, the iconic headquarter of the group, more than three decades ago.

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In the early 1990s, when Ratan Tata succeeded J.R.D. Tata as chairman of Tata Sons, he inherited a group that was vast but loosely held together. Several operating companies were effectively run by powerful barons who enjoyed immense autonomy and often commanded greater influence within their companies than Tata Sons itself.

What followed was one of the most talked-about power struggles in Indian corporate history, a battle that pitted Ratan Tata against some of the most formidable executives in the group and ultimately reshaped the Tata empire.

A chairman without control

When Ratan Tata became chairman of Tata Sons, the holding company of Tata Group, in 1991, the transition looked orderly from the outside. J.R.D. Tata had personally chosen him as successor after years of deliberation. Yet the new chairman inherited an organisation where authority was widely dispersed.

For decades, Tata companies had functioned with substantial independence. The group was less a centrally directed conglomerate than a federation of businesses linked by history, cross-shareholdings and the Tata name. The heads of major companies often enjoyed near-complete operational freedom. Many had built their own networks of influence within boards, management teams and shareholder groups.

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Ratan Tata would later acknowledge that Tata Sons lacked both the legal and practical authority to dictate terms to many group companies. Several senior executives had spent decades building their businesses and regarded themselves as custodians rather than subordinates. Some even had stronger public profiles than the new chairman.

Three men stood out among this old guard -- Russi Mody at Tata Steel, Darbari Seth at Tata Chemicals and Tata Tea, and Ajit Kerkar at Indian Hotels. Each controlled a strategically important business. Each had his own power base. Each represented a challenge to the idea of a more integrated Tata Group.

The problem of the Tata satraps

The issue was not merely personality clashes but the structure of power inside the group. By the early 1990s, liberalisation was changing India's economy and competition was increasing and capital allocation decisions were becoming more important. Ratan Tata believed the Tata Group needed a unified strategy, common governance standards and stronger central oversight if it was to compete globally.

Many senior executives, who had built successful businesses under a decentralised model and saw little reason to surrender autonomy, viewed this differently. The resulting conflict was essentially a struggle over who would govern the Tata Group. Would Tata Sons become the unquestioned centre of authority or would individual company chiefs continue to operate as largely independent power centres?

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Russi Mody and the battle for Tata Steel

The most dramatic confrontation involved Russi Mody. Few executives in Indian business commanded the stature that Mody enjoyed in the late 1980s and early 1990s. He had spent decades at Tata Steel, then known as TISCO, and had transformed himself into a larger-than-life corporate figure. He was immensely popular among employees in Jamshedpur and had cultivated a public image that extended far beyond the steel industry.

Many observers believed Mody had once been a serious contender to succeed J.R.D. Tata as chairman of Tata Sons. The fact that J.R.D. ultimately chose Ratan Tata was itself a source of disappointment for sections of the old guard. The conflict escalated after Ratan Tata became chairman. In 1992, Tata Sons introduced a retirement policy that fixed retirement ages for senior executives. Officially, it was a governance reform. In practice, it gave the new chairman a mechanism to address entrenched centres of power.

Mody viewed Ratan Tata's move with suspicion. Tensions increased further when he sought to elevate his adopted son Aditya Kashyap within Tata Steel without securing wider approval. The episode triggered a confrontation with Tata Sons and exposed the growing divide between Mody and the group's leadership. Behind the scenes, boardroom alliances were shifting. Directors who had once deferred to company chiefs increasingly backed Tata Sons. J.R.D. Tata, despite his affection for Mody, did not intervene to reverse the succession process that he had initiated.

The struggle culminated in 1993 when Mody left Tata Steel. His departure sent a powerful message through the group that the most influential executive outside Bombay House had been defeated. The authority of Tata Sons had been asserted in a manner that could not be ignored.

Darbari Seth's quiet resistance

If the battle with Mody was public and dramatic, the conflict with Darbari Seth was more subtle. Seth was one of the most respected industrialists in the group. He had built Tata Chemicals into a major enterprise and played a central role in expanding Tata Tea. He was widely admired for his strategic vision and his ability to build institutions. His influence extended beyond the companies he formally controlled, and he commanded loyalty across sections of the group and enjoyed significant standing within corporate India.

However, unlike Mody, Seth did not engage in open confrontation. Yet he represented another autonomous centre of power at a time when Ratan Tata was trying to centralise authority. The retirement policy again became a crucial instrument. Seth approached retirement age in the mid-1990s. There were efforts to preserve influence through succession planning within his sphere. One important move involved positioning his son Manu Seth in a leadership role at Tata Chemicals.

Ratan Tata resisted the emergence of hereditary power centres inside group companies. Over time, Tata Sons steadily reduced the influence of the Seth camp. Manu Seth's eventual exit indicated that the transition envisioned by Darbari Seth would not materialise. The outcome mattered beyond Tata Chemicals. It demonstrated that succession within major Tata companies would no longer be determined primarily by incumbent chiefs.

Ajit Kerkar and the Indian Hotels saga

Ajit Kerkar presented a different challenge. As the driving force behind Indian Hotels and the Taj brand, Kerkar had built one of India's most recognised hospitality businesses. He was politically connected, socially influential and accustomed to operating with considerable independence. By the mid-1990s, concerns had emerged within Tata circles regarding governance practices and decision-making at Indian Hotels. Questions were raised about the concentration of authority and the relationship between the company and its chairman.

The dispute eventually expanded into investigations and allegations concerning financial irregularities. While many of the allegations became the subject of lengthy legal and corporate disputes, the larger issue for Tata Sons was governance. Ratan Tata increasingly viewed the continued existence of highly autonomous power centres as incompatible with the future structure he envisioned for the group.

Kerkar ultimately exited the Tata fold. As with Mody and Seth, his departure weakened another influential node of independent authority within the conglomerate.

How Ratan Tata gained the upper hand

Ratan Tata's victory was not achieved through a single boardroom coup. It was the result of a gradual campaign fought across governance structures, boards and succession processes. One important tool was the retirement-age policy. Critics argued that it was designed to remove rivals. Supporters maintained that it introduced consistency and accountability. Whatever the motivation, it provided a framework that could be applied across the group.

Equally important was Ratan Tata's ability to secure support from key institutional figures. J.R.D. Tata remained committed to the succession plan. Influential directors and advisers increasingly aligned themselves with the new chairman. The balance of power also shifted because the old guard was not united. Mody, Seth and Kerkar each fought separate battles. There was no coordinated resistance to the growing authority of Tata Sons.

Meanwhile, the broader business environment was changing. Liberalisation strengthened the argument for a more coherent group strategy, and investors and boards became more receptive to governance reforms that might have been resisted in an earlier era.

The emergence of a new Tata Group

By the end of the 1990s, the internal power struggle was effectively over. The Tata Group that emerged looked very different from the one Ratan Tata had inherited. Tata Sons exercised greater influence over appointments and strategy as group companies became more closely aligned. The Tata brand was managed more centrally, and cross-group initiatives became easier to execute.

The consolidation also laid the foundation for the group's next phase of expansion. During the following decade, Tata companies pursued a series of global acquisitions and ambitious growth plans that would have been far harder to execute in a fragmented structure.

However, the transformation came at a cost. Some critics believed the group lost a measure of entrepreneurial independence when the old barons departed. Others argued that centralisation was essential if the Tata Group was to survive and compete in a rapidly changing economy.

The current tensions involving Tata Trusts, Noel Tata and Chandrasekaran suggest that the question of who truly governs the Tata empire has once again become a live issue. The personalities are different, the institutional setting is different but the underlying contest over authority, succession and control bears some echoes of the struggle that reshaped the group in the 1990s.