Boardroom battle rocks 158-year-old empire behind Air India, Jaguar Land Rover
A boardroom dispute has thrown the future leadership of the 158-year-old Tata Group into question, with its holding company at odds with the charitable trusts that own most of it.
The board of Tata Sons, the parent company of Air India and Jaguar Land Rover, recently decided to extend chairman N. Chandrasekaran's term for another five years. However, Noel Tata, who leads Tata Trusts and controls 66% of Tata Sons, opposed this decision. The Tata Trusts contend that the appointment contravened company regulations, as both of the board's representatives needed to back it. Despite Noel Tata's objections, the board went ahead and approved the proposals.
This boardroom battle is not just about the appointment or a possible stock market listing; it's about Tata Sons taking its largest shareholder, Noel Tata, head-on. Tata Sons is the holding company of an empire that includes Air India, Jaguar Land Rover, Tata Consultancy Services, and Tata Steel. Established in 1868, the group operates in over 100 countries.
The dispute also raises broader questions about whether Tata Sons should be listed on the stock market. India's central bank recently denied its request for an exemption from rules that could necessitate a listing. Chandrasekaran's team is attempting to comply with the regulator's demands and is considering a listing, while Noel Tata argues that converting the business group into a publicly-traded entity could alter a company whose primary shareholder is a charity.
Even within Tata Trusts, the potential stock market listing has caused divisions among executives. While Noel Tata and some former Tata Sons directors oppose the move, trustees Srinivasan and Vijay Singh support it. Another shareholder, who holds an 18% stake in Tata Sons, also backs a listing, according to The Indian Express.
Notably, the Tata Sons board's decision to reappoint Chandrasekaran and consider a listing violated the fundamental principle of shareholder supremacy, according to proxy advisory firm IiAS. This mutiny against the controlling shareholder is unprecedented and may set a dangerous precedent for corporate India. The tensions surrounding Air India's losses and the potential sale of another major shareholder's stake could further complicate matters. For now, neither dispute has been resolved.
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