Tata Sons board backs Chandrasekaran for fresh five-year term

In Short

About three weeks ago, Chandrasekaran, 63, told the directors that he did not intend to seek reappointment when his term ends on February 20, 2027.

Tata Sons board backs Chandrasekaran for fresh five-year term
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Tata Sons board backs Chandrasekaran for fresh five-year term

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Mumbai: The Tata Sons Ltd board’s decision to approve a proposal for a fresh five-year term for N Chandrasekaran as executive chairman has ended months of uncertainty over the conglomerate’s leadership and its long-pending listing plan.

About three weeks ago, Chandrasekaran, 63, told the directors that he did not intend to seek reappointment when his term ends on February 20, 2027. However, the board decided to extend his tenure. Tata Trusts Chairman Noel Tata, who has veto powers, is learnt to have opposed the reappointment proposal but was outvoted by other board members.

Noel had raised concerns over Chandrasekaran’s performance and the capital allocation of businesses including Air India and Tata Digital.

According to agency reports, the twin decisions could still face a challenge from the Tata Trusts, which own a majority stake in the conglomerate. Both decisions will have to be approved at the company’s AGM.

It may be mentioned that the board’s decision to extend Chandrasekaran’s tenure came after the RBI’s September 11 letter asking Tata Sons to comply with rules governing upper-layer non-banking financial companies.

Board members reasoned that continuity of leadership would reassure prospective investors ahead of any listing process, according to sources. The Trusts, which together control about 66 per cent of Tata Sons, could still contest the decision, the sources said.

Noel, it is said, wanted Tata Sons to seek an explanation from the RBI for rejecting its application to surrender its core investment company registration. Tata Sons had repaid its outstanding debt in an earlier bid to qualify for the exemption.

The Shapoorji Pallonji Group, which holds about 18 per cent of Tata Sons, has pushed for a listing to unlock value from its stake and support its own debt repayment.

An eventual Tata Sons listing could rank among the largest IPOs in Indian history. Even a 1 per cent stake sale has been valued at an estimated Rs 15,000-20,000 crore, implying an overall valuation of nearly Rs 20 lakh crore, or roughly $230 billion, for the conglomerate, which holds controlling stakes in more than a dozen listed companies across steel, automobiles, software services, hospitality and aviation.

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