Noel Tata, chairman of Tata Trusts, reportedly sought support from India's most prominent business families ahead of a pivotal Tata Sons board meeting on September 17. His outreach aimed to explain his position as a power struggle intensified between him and Tata Sons Chairman N Chandrasekaran.
Chandrasekaran Reappointed Amid Dissent
During the September 17 board meeting, directors requested N Chandrasekaran reconsider his earlier decision not to seek another term as executive chairman. After his agreement, the board voted 4:1 to reappoint him for another five years. Noel Tata cast the sole dissenting vote, while Chandrasekaran abstained from the resolution.
The board also agreed to comply with a regulatory push from the Reserve Bank of India (RBI) to list Tata Sons, a move Noel Tata vocally opposed. People familiar with the situation indicate Noel's prior confidence in government receptiveness had waned, prompting his direct engagement with influential corporate figures.
Strategic Investments and Listing Push Fuel Conflict
Sources reveal that Noel Tata's efforts to garner support came as he sought to challenge Chandrasekaran's leadership, particularly regarding the holding company's strategic direction. The Tata Trusts, which own 66% of Tata Sons, are reportedly concerned about significant capital commitments to long-gestation businesses such as semiconductors, electronics, and aviation. A confidential analysis reviewed by Bloomberg suggests these ventures could require over Rs 2 lakh crore in additional capital before generating substantial returns.
The Trusts advocate for tighter oversight of future capital spending, while Chandrasekaran's camp argues for continuity, especially as these projects enter critical development phases. Chandrasekaran has cultivated a strong network within corporate India and New Delhi over nearly a decade, positioning himself as a key interlocutor for the government on strategic projects.
RBI Listing Mandate and Potential Legal Action
The dispute has been further exacerbated by the RBI's mandate for Tata Sons to list. The central bank recently rejected Tata Sons' attempt to avoid a regulatory classification that triggers listing requirements. Noel Tata has proposed a restructuring of Tata Sons to circumvent the listing, fearing it could complicate the Trusts' control and voting rights.
Reports suggest Noel Tata is prepared to approach the Supreme Court if necessary over potential restrictions on the Trusts' voting rights. However, officials have quietly signaled their preference to resolve the dispute outside of court intervention, highlighting the high stakes involved in the future leadership and strategic direction of one of India's largest conglomerates.