Tata Group stocks under pressure as Tata Trusts-Tata Sons rift deepens
The dispute also comes as Tata Sons faces renewed pressure over its potential listing after the RBIb rejected its request to surrender its registration and continue as a private company
Tata Group stocks experienced a decline in early trading on Monday as tensions between Tata Trusts and Tata Sons escalated, casting uncertainty over the conglomerate's future structure. By 12:24 IST, Tata Capital had dropped nearly 3% to ₹341, while Tata Power fell 2.5% to ₹365.55. Other affected companies included Tata Investment Corporation, down 2.3% to ₹685.90, and Tata Technologies, slipping 2.2% to ₹707.
Tata Elxsi saw a 2% decrease to ₹3,268, marking its lowest point in 52 weeks. Tata Motors Passenger Vehicles and Commercial Vehicles each declined by around 1%, with Tata Communications falling 1.5% to ₹1,746.80 and Tata Teleservices dropping 1.4% to ₹35.25.
The immediate catalyst for the market downturn is a dispute over Tata Sons Chairman N Chandrasekaran's reappointment. The Tata Sons board approved a five-year extension for Chandrasekaran on September 17, but Tata Trusts, which owns about 66% of Tata Sons, has questioned the decision's validity. They argue that the Articles of Association require affirmative support from a majority of Trust-nominated directors, which was not met as one of their two nominees voted against the resolution.
The Trusts claim that Tata Sons' casting vote cannot override the lack of majority support. Meanwhile, Tata Sons faces additional pressure over its potential listing, as the Reserve Bank of India rejected its request to surrender its registration and remain a private company. These developments suggest that further announcements on the leadership dispute, governance arrangements, and Tata Sons' listing plans will continue to impact Tata Group's stock performance.
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