Noel Tata challenges Chandra’s second coming

MUMBAI: Tata Sons board voted to reappoint N. Chandrasekaran as executive chairman for another five-year term, after he initially decided not to seek reappointment last month due to conflicts with Tata Trusts. However, Tata Trusts, which holds a 66% stake in Tata Sons, declared Chandrasekaran's reappointment illegal, potentially sparking further turmoil in one of India's most prominent family firms.

The Tata Group, a diversified conglomerate with annual revenues exceeding USD 180 billion and employing over a million people, has been grappling with leadership challenges for over a year due to boardroom disagreements on various issues. When his five-year term ends in February 2027, Tata Trusts had earlier agreed to let Chandrasekaran reconsider his decision, citing his significant contributions to the group.

The Trusts have since called for a selection committee to choose his successor, emphasizing that Chandrasekaran's reappointment is legally null and void according to Tata Sons' articles of association. Despite Tata Trusts' minimal involvement in the daily operations of the conglomerate, their substantial shareholding allows them considerable influence over the group's future.

Key Tata Group businesses, such as Tata Consultancy Services, have been facing significant challenges in the global market, and recent high-cost investments, including the acquisition of Air India and semiconductor manufacturing ventures, have yet to yield expected returns. India's central bank has expressed interest in listing Tata Sons publicly, which would enhance shareholder transparency and potentially diminish Tata Trusts' influence over the conglomerate.

However, the Reserve Bank of India recently rejected Tata Sons' exemption from the listing requirement. If an initial public offering by Tata Sons were to materialize in the future, it would be one of the largest in India.