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Noel Tata vs N Chandrasekaran? Inside their tense Tata Group ties
Noel Tata, chairman of Tata Trusts and a member of the Tata family, was the only board member to vote against the decision to retain N Chandrasekaran.
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The reappointment of N Chandrasekaran as Tata Sons chairman for another five years has exposed growing differences between the conglomerate's board and Tata Trusts, which controls a majority stake in the holding company.
The 63-year-old, Chandrasekaran, had announced last month that he would step down when his tenure ends in February 2027. However, on September 17, the Tata Sons board voted to extend his tenure.
Noel Tata, chairman of Tata Trusts and a member of the Tata family, was the only board member to vote against the decision. He later released a statement calling the resolution a “legal nullity”.
Deep Dive
The disagreement comes at a critical time for the Tata Group, which is managing challenges across its aviation and automobile businesses while expanding its electronics and semiconductor operations. The Trusts has also resisted any proposed stock market listing of Tata Sons, warning that it would “destroy” the character of a group majority-owned by charitable institutions.
Cracks over chairman's reappointment
Tata Trusts has opposed Chandrasekaran's continuation, arguing that his reappointment violates the group's internal rules.
According to the Trusts' position, decisions concerning the appointment of the Tata Sons chairman require the approval of both its nominees on the company's board — Noel Tata and Venu Srinivasan. While Noel Tata voted against the decision, Srinivasan did not.
Noel Tata has argued that the reappointment is illegal because the two trustee nominees did not vote together.
Tata Sons, on the other hand, maintains that the appointment was valid because it was approved through a majority vote.
The disagreement has turned into an open dispute between Tata Sons' board and its largest shareholder. A senior Tata executive, speaking to Reuters on condition of anonymity, said Chandrasekaran would need to resolve the matter himself.
“For everything else he (Chandrasekaran) can put the right people, but this he has to solve himself,” the executive said.
Air India losses and Tata Sons listing
The differences between Chandrasekaran and Tata Trusts extend beyond the question of his reappointment. The two sides have also disagreed over Air India's performance, a possible listing of Tata Sons and a proposed stake sale by a minority shareholder in the holding company.
Tata Sons acquired Air India from the Indian government in January 2022. Since then, the airline and its wider group have faced substantial losses. The combined annual losses of Air India Group have been cited as one of the issues over which Chandrasekaran and the Trusts have clashed.
Meanwhile, Tata Sons is dealing with a proposed $2.6 billion stake sale by a minority shareholder and an ongoing debate over whether the holding company should be listed on the stock market.
A complicated control of Trust
Tata Trusts holds a 66% stake in Tata Sons, giving it substantial influence over the holding company. However, a regulatory dispute involving one of its major charitable entities has complicated its ability to exercise that control.
The Trusts is an umbrella organisation of affiliated charities. Sir Ratan Tata Trust, one of its two largest institutions, holds a 23.6% stake in Tata Sons.
However, a charity regulator has barred the trust from convening its trustees over a dispute concerning their appointments, Reuters reported. The restriction has prevented the trust from holding meetings and taking decisions.
As a result, Tata Trusts' majority ownership has not translated into an uncomplicated ability to exercise control over Tata Sons.
Noel Tata and the question of succession
Chandrasekaran has spent his entire corporate career within the Tata Group, having joined Tata Consultancy Services (TCS) in 1987. He was appointed chairman of Tata Sons in January 2017.
Noel Tata had previously been speculated to succeed Ratan Tata as the head of the group. However, Chandrasekaran continued in the role, while Noel Tata took charge of the charitable institutions that hold a majority stake in Tata Sons.
(With Reuters inputs)
