The Trustees of Tata Trusts today appointed Tata group veteran, Srinath Narasimhan as the Chief Executive of the Trusts, effective April 1. The appointment comes at a time when the Trusts are facing litigation with income tax department over its tax status and are involved in the midde of a bitter legal dispute between Tata Group's former Chairman, Cyrus Mistry and group patriarch, Ratan Tata in the Supreme Court over Mistry's removal from Tata Sons.
The trusts own 66 per cent stake in Tata Sons – the holding company of Tata group and use the dividend income to run charitable programmes.
Narasimhan is the present Managing Director of Tata Teleservices Limited which sold its loss-making wireless telephony business to Bharti Airtel for free but is one of those rare companies in India which paid its entire bank debt and government dues worth Rs 60,000 crore in full.
Narasimhan has held various assignments in the Tata group, including Managing Director of Tata Communications Ltd. He had joined Tata Administrative Services in 1986.
The Trustees also appointed Pramit Jhaveri, former CEO of Citi India and former Vice Chairman of banking, capital markets and advisory for Asia Pacific of the American bank, as a Trustee of the Sir Dorabji Tata Trust with effect from today.
In February last year, R Venkataramanan (popularly known as Venkat) had stepped down as managing trustee of Tata Trusts. The new CEO was not designated managing trustee as Venkataramanan's high salary had raised several eye brows.
Venkat’s resignation followed the Income-Tax Department’s scrutiny of his annual salary of Rs 2.66 crore, and the subsequent withdrawal of tax exemption given to Sir Dorabji Tata Trust, which is the largest among the Tata Trusts.
Later, a search committee, led by Tata interviewed several internal employees as well as professionals from elsewhere to select a CEO and finally zeroed in on Srinath by November.
After Venkat’s resignation, operations of Tata Trusts was managed by Tata along with a core group of officials. Among other recent changes in the organisation, Noel Tata, Ratan Tata’s half-brother, was appointed a trustee of the Sir Ratan Tata Trust, which is the second biggest trust in the Tata Trusts fold.
One of the immediate challenges before Srinath will be to handle the litigation with the Income tax department. On October 31 last year, the I-T Department cancelled the registration of six trusts (not the bigger ones) operating under Tata Trusts, citing violation of norms applicable to charitable institutions — a move that may result in a tax liability of about Rs 12,000 crore.
The Tatas are challenging the date of the order, which makes the Trusts liable to pay a much higher amount of tax under the new tax provision introduced in June 2016 concerning charitable trusts. The Trusts is of the view that the cancellation should apply retrospectively as it had offered to surrender the registration in 2015, about one year before the new tax provision became effective.
Srinath will have to continue the exceptionally good work done by the Trusts in the field of education, health, environment and sanitation among other activities. Tata Trusts today runs some of the best charitable programmes in India from the money it earns as dividend from Tata Sons.