Mumbai, India – Several prominent Tata group companies experienced a sharp decline in their stock prices on Friday, following a contentious dispute over the reappointment of Tata Sons Chairman Natarajan Chandrasekaran. Tata Trust, the controlling shareholder of Tata Sons, publicly deemed the board's decision to reappoint Chandrasekaran as "illegal," triggering market uncertainty.
Key Tata Stocks See Significant Drops
Among the hardest hit were Tata Chemicals Ltd, which saw its shares fall by 7.9% to Rs 718.70 apiece on the NSE, and Tata Investment Corp Ltd, which declined 4.35% to Rs 688. Other group entities, including Tata Motors Passenger Vehicles Ltd, Tata Steel, and Tata Consumer Products Ltd, also registered losses during Friday's trading session.
According to a Bloomberg report, several listed Tata group companies hold significant stakes in Tata Sons. Tata Chemicals holds 2.53%, Tata Investment Corp Ltd 0.08%, Tata Steel 3.06%, Tata Motors Passenger Vehicles Ltd 3.06%, Tata Power Company Ltd 1.65%, Indian Hotels 1.11%, and Tata Consumer Products Ltd 0.43%. Collectively, these seven listed entities represent 11.94% of Tata Sons' equity.
Dispute Over Chairman's Term
The controversy stems from Chairman Chandrasekaran's current term, which is slated to end on February 20, 2027. Sources indicate that Chandrasekaran had informed the Tata Sons board in August that he did not intend to seek another term. Tata Trusts, which holds approximately 66% of Tata Sons' equity, subsequently reiterated its position that Chandrasekaran's decision not to seek reappointment had been accepted and "has attained finality."
In a strong statement to the Tata Sons board, Noel Tata, representing Tata Trusts, asserted that Chandrasekaran's August 12 communication was his "own decision," taken "freely and clearly expressed." He highlighted that this letter was later made public without prior consultation with Tata Trusts. The Trusts had formally requested Tata Sons to establish a selection committee, as per its Articles of Association, to identify and appoint Chandrasekaran's successor.
Legal Challenge Warning Issued
Noel Tata further warned that any resolution for re-appointment at the current meeting would effectively disregard three critical elements: the Chairman's own stated decision, the acceptance of that decision by the majority shareholder (Tata Trusts), and the ongoing process initiated by the Trusts for succession. He cautioned that a decision regarding the chairmanship could face "serious legal challenge" if Chandrasekaran's position as a director were to be questioned later.