The Tata Group was established by its founder Jamshedji Nasirwanji Tata — the great-grandfather of Ratan Tata– in 1868 when he bought a bankrupt oil mill for Rs 21,000, a massive amount at the time, and turned it into a cotton factory.
Ratan Tata, the Chairman Emeritus of the Tata Group, passed away earlier this week on Wednesday (October 9), at a hospital in Mumbai. Ratan Tata served as the Chairman of Tata Group and Tata Sons from 1991-2012, and as Interim Chairman from October 2016-January 2017, and during his tenure transformed the group from a domestic business house into a global juggernaut which at present has a market cap of $403 billion (more than Rs 33.7 trillion), having over 30 companies spread across more than 100 countries.
But how is Tata’s massive business empire and what is the difference between its major arms Tata Trusts, Tata Sons, and the Tata Group? Here’s what you should know about the Rs 34 lakh crore conglomerate and how it operates.
How Tata Group runs its vast businesses?
The Tata Group was established by its founder Jamshedji Nasirwanji Tata in 1868 when he bought a bankrupt oil mill for Rs 21,000, a massive amount at the time, and turned it into a cotton factory. After 135 years, Jamshedji Tata’s modest cotton factory is now a global conglomerate with businesses in almost every sector one can imagine, spread over 100 countries.
According to several reports, around 66 percent of Tata Group’s earnings go to charitable ventures which are undertaken by its various trusts under the umbrella body called Tata Trusts, which has two main trusts Sir Ratan Tata Trust and Sir Dorabji Tata Trust– having a combined 52 percent stake in the company.
Other trusts running under Tata Trusts have a combined stake of 14 percent, and as such Tata Trusts, which has a 66 percent stake in the Tata Sons is the largest stakeholder in the company.
Tata Consultancy Services (TCS) is the largest company of the Tata Group boasting a market cap over Rs 15 lakh crore, nearly half of the conglomerate’s total valuation.
Difference between Tata Sons, Tata Group, and Tata Trusts?
In layman’s terms Tata Sons is the parent company of Tata Group, which consists of over 100 operating companies. In more technical terms, Tata Sons is the holding company that owns the majority of the Tata Group’s shareholding, including land, tea estates, and steel plants. Tata Sons derives revenue from dividends and brand loyalty fees.
Meanwhile, Tata Trusts is an umbrella company under which several trusts engaged in philanthropic ventures in fields such as art, culture, education, health, and livelihood generation, operate. Tata Trusts has a combined 66 percent stake in Tata Sons, making it the majority shareholder of the company.