Tata’s 133-year legacy of profits and giving

In 1892, he established the JN Tata Endowment Fund to help Indian students pursue higher studies abroad because he understood the transformative power of education.

Jamsetji also recognised the high rate of Indian women dying in childbirth due to discomfort with seeing male doctors and the scarcity of female doctors.

Consequently, the first recipients of his educational endowment, whom he personally selected, were two female students sent abroad to study medicine.

By 1903, Jamsetji’s business interests and wealth had grown extensively, enabling him to build and open the iconic, now world-famous Taj Mahal Hotel in Mumbai.

He died shortly thereafter in 1904, and the business, which by then consisted of three textile mills and the hotel, passed to his two sons. Sir Dorab Tata, the eldest son and first chairman of Tata Sons, started Tata Steel in 1907 and opened a hospital near the factory, as well as Tata’s first overseas office in London.

In 1910, Dorab opened western India’s first hydro plant, giving birth to Tata Power. His wife, Lady Meherbai Tata, suffered from leukemia and died young, leading him to dedicate all his wealth to the Sir Dorab Tata Trust for the advancement of learning, research into leukemia, the relief of distress, and other charitable purposes.

Like his father before him, Dorab strongly believed that wealth should always be used constructively for good. He was conferred a knighthood in 1910 by King Edward VII for his significant contributions to industry in British India.

In 1896, Dorab’s younger brother, Sir Ratan Tata, joined the family business, Tata and Sons, as a partner.

Despite growing up in wealth, Ratan was best known for his philanthropic efforts, which earned him a knighthood in 1916 from King George V for his services to humanity.

He gave generously to various causes, including research into poverty and tuberculosis, as well as supporting Mahatma Gandhi’s activism against racism in South Africa.

In accordance with his will, following his death in 1919, all his wealth went into a trust largely dedicated to providing educational scholarships. These scholarships have benefitted a former Indian president and numerous well-known Indian scientists.

Other relatives joined the business alongside the Tata brothers, carrying forward a deep spirit of both entrepreneurship and philanthropy.

JRD Tata, one of Jamsetji’s nephews, loved flying and, in 1932, piloted the first flight carrying mail between Karachi and Mumbai. This marked the birth of Tata Airlines, which was renamed Air India in 1946 and later nationalised by the Indian government in 1953, shortly after independence.

Fun fact: after enjoying glory days in the 1960s and 1970s, followed by decades of decline and financial losses, the Tata Group bought back Air India from the Indian government in 2022.

Today, the Tata Group is valued at approximately $365 billion, with 30 publicly listed companies and over 700,000 employees operating in more than 100 countries including Kenya, where Tata Chemicals Magadi Ltd is the largest natural soda ash manufacturing company in Africa, based at Lake Magadi.

The Group’s ownership interests span automotive (including Jaguar Land Rover), steel, technology, aviation, energy, and consumer goods.

The holding company, Tata Sons, is 66 percent owned by the Sir Dorab Trust, the Sir Ratan Trust and a combination of other family trusts. Since the primary objective of these trusts is charitable, it is safe to say that 66 percent of this massive conglomerate’s profits flow back into communities in the form of philanthropic causes.

The purpose of this journey through Tata’s history is to demonstrate what a family business looks like when the founder’s singularly philanthropic motivation becomes the primary value proposition for its 133 years of existence.

The Tata Group is guided by the principle that businesses must serve stakeholders beyond just shareholders, these include employees, consumers, communities and the nation at large.

With independent boards across all subsidiary companies, next week we will delve into how the Tata family trusts have survived over a century of doing business while giving back to society.

Carol Musyoka is a former banker and is currently a corporate governance specialist.