Mumbai, Sept 18:
The board of Tata Sons has approved a fresh five-year term for N Chandrasekaran as executive chairman and decided to proceed with the process of listing the Tata Group’s holding company, in two decisions that could potentially face opposition from Tata Trusts.
The decisions were taken at a meeting in Mumbai on Thursday, weeks after Chandrasekaran had informed the board in August that he did not intend to seek another term when his current tenure ends on February 20, 2027. Following the board vote, he has been asked to reconsider his decision.
Both the proposed reappointment and the listing of Tata Sons will require approval at the company’s Annual General Meeting. The board’s decision on the listing comes after the Reserve Bank of India rejected Tata Sons’ application to surrender its registration as a core investment company.
The RBI had classified Tata Sons as an upper-layer non-banking financial company in 2022, making a stock-market listing necessary under the applicable regulatory framework. The company’s attempt to obtain an exemption from the listing requirement was rejected by the central bank earlier this month.
The board is understood to have favoured leadership continuity as the group prepares for a possible initial public offering. Tata Sons had earlier repaid more than Rs 21,000 crore in debt as part of its efforts to qualify for an exemption from the listing requirement.
The reappointment decision was not unanimous. Noel Tata, chairman of Tata Trusts, voted against Chandrasekaran’s reappointment, though the resolution was approved by a majority of the board, according to people familiar with the matter.
Tata Trusts collectively control about 66 per cent of Tata Sons and could challenge the board’s decision. The listing proposal has also exposed differences within the Trusts over the issue.
Chandrasekaran has headed Tata Sons since February 2017, when he succeeded Ratan Tata. He was unanimously reappointed for a second five-year term in 2022.
The proposed listing of Tata Sons could become one of India’s largest public offerings, given the company’s controlling interests in businesses spanning automobiles, steel, information technology, aviation, hospitality and other sectors. The Shapoorji Pallonji Group, which owns around 18 per cent of Tata Sons, has also supported a listing of the holding company.
The board’s latest decisions are expected to bring the succession question surrounding Tata Sons back into focus while also setting the stage for a potential stock-market listing.