Tata Trusts chairman Noel Tata is likely to challenge N Chandrasekaran’s 5-year extension as Tata Sons Chairman, according to a Reuters report.
This comes amid on Thursday approving N Chandrasekaran’s reappointment as chairman for another five-year tenure. The decision comes just weeks after Chandrasekaran, 63, had indicated to board members that he was not looking to continue for a third term, suggesting a change in plans amid regulatory developments concerning the group’s holding company.
Noel Tata reportedly voted against extending tenure. Tata Trusts and related entities collectively own around 66% of Tata Sons. Despite his opposition, the reappointment proposal was approved by a majority of the board.
The development also follows the Reserve Bank of India’s (RBI’s) decision last week to reject Tata Sons’ request to give up its registration as a non-banking financial company (NBFC). The move could once again put pressure on Tata Sons to pursue a stock market listing, something the company has sought to avoid for more than a year.
As part of its efforts to prevent such a listing, Tata Sons had repaid more than ₹21,000 crore in debt.
Tata Sons board members believe retaining the current leadership could provide greater confidence to potential investors if the holding company moves towards a stock market listing, according to PTI citing people familiar with the matter. Investors generally look for stability in the management team once a company begins preparations for an initial public offering.
The company’s Nomination & Remuneration Committee is expected to formally approach N Chandrasekaran and ask him to reconsider the decision to step down that he conveyed to the board in August, reported PTI. That decision was taken before the RBI’s ruling and was based on expectations about Tata Sons’ regulatory status that have since changed.
has been against a public listing of Tata Sons since at least February. His stance was reportedly among the conditions he had sought in connection with his support for Chandrasekaran’s previous term extension.
The Shapoorji Pallonji Group, which owns about 18% of Tata Sons and was established by Noel Tata’s father-in-law, has taken the opposite position and supports a listing of the holding company.
Chandrasekaran’s proposed exit followed differences with Noel Tata
N Chandrasekaran has been at the helm of Tata Sons since 2017, taking over after Cyrus Mistry was removed by the board, with Ratan Tata subsequently serving as interim chairman. Chandrasekaran secured another five-year term in 2022.
He informed the board in August that he planned to step down, following months of disagreements with Noel Tata over whether Tata Sons should pursue a stock market listing and how capital should be deployed across newer businesses such as Air India, Tata Digital and BigBasket, several of which have continued to incur losses.
The board had already put off a decision on Chandrasekaran’s third term in February after Noel Tata voiced similar concerns during a meeting that lasted nearly three hours at Bombay House.