Tata Trusts row may stall Chandra's term

On Thursday, Tata Sons board announced it had voted to reappoint N Chandrasekaran as the executive chairman for another five-year term. This decision came after Chandrasekaran had previously decided not to seek reappointment amid ongoing conflicts with Tata Trusts, a philanthropic group owning 66% of Tata Sons. Tata Trusts, however, declared Chandrasekaran's reappointment illegal, potentially sparking a crisis within the renowned Indian family business.

Tata Group, a sprawling conglomerate with interests from salt to software, reported annual revenues exceeding $180 billion in 2024-2025, employing over a million people.

The leadership crisis within the Tata Group has persisted for roughly a year, plagued by disagreements over issues like losses in certain group firms. The Tata Sons board meeting occurred a month after Chandrasekaran expressed his intention not to seek reappointment, following months of tension with Tata Trusts chairman Noel Tata.

The board's nomination and remuneration committee, however, urged Chandrasekaran to reconsider his decision, citing his contributions to the Tata Group and its larger interests. Eventually, Chandrasekaran acceded to the board's request to reassess his decision.

Tata Trusts, however, maintains that the board's decision to reappoint him, despite Noel Tata's dissenting vote, is a legally nullified action under Tata Sons' articles of association. The Trusts have acknowledged Chandrasekaran's decision to step down upon the expiration of his term in February 2027 and have already called for the formation of a selection committee to choose his successor.

While Tata Trusts does not participate in the day-to-day management of the conglomerate, their substantial shareholding grants them significant influence over the group's future. Several key businesses within the group, such as Tata Consultancy Services, are currently facing major global headwinds. Other costly ventures, like the acquisition of Air India in 2022 and investments in semiconductor manufacturing, have yet to yield profitable results.

India's central bank has urged Tata Sons to go public, a move that would provide greater transparency into the conglomerate's operations for the shareholders of its group firms. However, listing would diminish the impact of Tata Trusts' influence on the conglomerate, according to Shriram Subramanian of InGovern Research, a shareholder advisory firm.

Despite Tata Sons' request for an exemption from the listing requirement, the Reserve Bank of India rejected it last week. An IPO by Tata Sons, should it materialize, would likely rank among the largest in India.