India’s Tata reappoints chairman, backs listing in rift with controlling charity

By Aditya Kalra and Jayshree P Upadhyay

NEW DELHI, Sept 17 (Reuters) – India’s Tata Sons reappointed N. Chandrasekaran as chairman on Thursday and decided to consider a public listing, defying the family charity that controls the salt-to-software conglomerate and laying bare a schism within the 158-year-old group.

Chandrasekaran and the Noel Tata-led Tata Trusts, which owns 66% of the holding company, have clashed over issues including a potential listing of Tata Sons, Air India’s mounting losses and a planned exit by a minority shareholder.

The 63-year-old chairman’s reappointment is likely to reassure investors as the group grapples with deepening losses at Air India and a sharp downturn at Jaguar Land Rover. Shares of Tata Group firms surged on Thursday.

However, the charity arm publicly opposed Chandrasekaran’s reappointment and a potential Tata Sons listing, setting the stage for a confrontation.

Boardroom disputes are not new to Tata Sons. In 2016, the board ousted its then-chairman after he fell out over governance issues ​with group patriarch Ratan Tata, Noel’s half-brother who headed the charity arm until his death in 2024.

Chandrasekaran had said last month he would not seek another term as chairman after February 2027. But Tata Group said in a statement the board this month asked him to reconsider in the group’s “larger interests”, a request he accepted on Thursday.

Noel Tata, 68, opposed Chandrasekaran’s reappointment and a potential listing of Tata Sons in a statement at Thursday’s board meeting.

The reappointment is “illegal” under Tata Sons’ articles of association, Tata Trusts said in a statement, adding that both trust nominees on the board were required to vote in favour, while Noel Tata voted against.

Tata Sons did not respond to a request for comment on the allegations.

Chandrasekaran joined the group’s IT services arm TCS in 1987 after a master’s degree in computer applications, and rose through the ranks. The group has described him as a “Tata lifer”. He first became chairman of Tata Sons in 2017 and the reappointment gives him a third term.

FIGHT OVER LISTING

The most significant point of contention now appears to be whether Tata Sons should pursue a stock market listing.

The charity arm said late on Thursday it has asked Tata Sons to explore alternatives, arguing that the “Tata Model has to be saved”.

“What makes the Tata operating structure unique is that it is premised on trust and its majority shareholder is a charity … A listing will destroy its character and strike at the heart of this principle,” it said.

The dispute comes days after the Reserve Bank of India (RBI) rejected Tata Sons’ request for an exemption from rules that would require it to list.

The RBI classified Tata Sons as an “upper-layer” non-banking financial company (NBFC) in 2022, a category subject to enhanced regulation and a listing requirement.

The board on Thursday decided it would move towards compliance with those rules and consider a listing, a source with direct knowledge of the situation told Reuters. 

Tata Sons stopped short of making that explicit, saying it would “initiate steps to comply with the applicable RBI Guidelines and will seek guidance from RBI, Tata Trusts and other stakeholders on applicable compliance requirements.” 

“Retaining Chandrasekaran removes a potential leadership uncertainty and reassures investors,” said Aishvarya Dadheech, founder and chief investment officer at India’s Fident Asset Management.

Tata Sons, the holding company of the Tata Group, controls more than 30 Tata companies, including TCS and Tata Motors. 

​Tata Group companies generated ⁠combined revenue of $185 billion in the last financial year. Its 26 listed companies had a combined market capitalisation of $277 billion as of March 31.

(Reporting by Aditya Kalra in New Delhi and Surbhi Misra and Chandini Monappa in Bengaluru; Additional reporting by Bharath Rajeswaran; Editing by Sonia Cheema, Alexander Smith and Mark Potter)