Tata Sons has deferred a decision on extending the tenure of chairman Natarajan Chandrasekaran for a third term, prompting questions over a unanimous resolution passed last year by trustees of Tata Trusts recommending his continuation, PTI reported.
According to PTI, the matter was discussed at a Tata Sons board meeting on Tuesday, but no final decision was taken. The move is being read by observers as a sign of differences within the holding company of the $180-billion salt-to-software conglomerate.
Questions over trustees’ resolution
As per the PTI report, Noel Tata, chairman of Tata Trusts, is learnt to have placed certain conditions around Chandrasekaran’s re-appointment. These reportedly include concerns over losses at group companies such as Air India, risks arising from heavy capital expenditure in semiconductor and battery ventures, and assurances that Tata Sons would not pursue a stock market listing.
“It definitely raises questions on the validity of the unanimous resolution passed by the trustees of Tata Trusts last year recommending a third term for Chandrasekaran,” PTI quoted sources. “Can a nominated director of Tata Trusts go against the unanimous decision of the trustees?”
However, PTI quoted another source with direct knowledge of the matter and reported that the resolution “clearly stands” and was taken unanimously after due deliberation. “What Noel Tata did was within his capacity as a director of Tata Sons and was not necessarily against the resolution of the trustees. The resolution will be implemented in due course,” the source told PTI.
Majority holding and broader context
Tata Trusts collectively hold a 66% stake in Tata Sons, which in turn controls the diversified Tata Group with interests spanning automobiles, steel, software, aviation and emerging sectors such as semiconductors.
The development comes against the backdrop of tensions within Tata Trusts over the past year. According to PTI, senior Tata Group leaders, including Noel Tata and Chandrasekaran, met Union Home Minister Amit Shah and Finance Minister Nirmala Sitharaman amid internal differences. The government is learnt to have advised the trusts to resolve matters amicably and avoid public discord, given the Tata Group’s significance to the Indian economy, PTI said.
In January, a proposed board meeting of the Sir Ratan Tata Trust, which was expected to consider the appointment of Neville Tata, son of Noel Tata, as a trustee, was cancelled due to a lack of quorum, PTI reported. An earlier attempt to induct him had also failed.
Neville Tata and former group executive Bhaskar Bhat were appointed to the Sri Dorabji Tata Trust last November. The Sri Dorabji Tata Trust holds about 28% in Tata Sons, while the Sir Ratan Tata Trust owns 23.6%. Other Tata-affiliated trusts together hold 13.8%.
With Tata Trusts being the majority shareholder in Tata Sons, the decision on Chandrasekaran’s third term is likely to remain closely watched.