Tata Sons board votes to reappoint Chandrasekaran for third term

Mumbai (PTI): Tata Sons' board on Thursday voted to reappoint N Chandrasekaran for a third five-year term as chairman, weeks after he told directors he did not intend to seek reappointment, people familiar with the deliberations said, a reversal driven by regulatory pressure on the group's holding company.

The shift follows the Reserve Bank of India's rejection last week of Tata Sons' application to surrender its registration as a non-banking financial company - a decision that revives the prospect of a stock listing the company had spent more than a year trying to avoid, including by repaying more than Rs 21,000 crore in debt.

Board members reasoned that continuity of leadership would reassure prospective investors ahead of any listing process, sources said. Potential investors typically seek assurance on management continuity once a company embarks on an initial public offering.

Tata Sons' Nomination & Remuneration Committee will formally ask Chandrasekaran, 63, to reconsider the decision he communicated to the board in August - a decision made before the RBI's ruling and under a different set of assumptions about the company's regulatory path.

Noel Tata, chairman of Tata Trusts, which together with affiliated trusts controls about 66 per cent of Tata Sons, voted against the reappointment, but the resolution carried on a majority vote, sources said.

Noel Tata has opposed a listing since at least February, when the position was reportedly among the conditions he attached to backing Chandrasekaran's previous term renewal.

Shapoorji Pallonji Group, which holds roughly 18 per cent of Tata Sons and was founded by Noel Tata's father-in-law, has favoured a listing.

As a consequence of Thursday's vote, the chairman-selection process already initiated by the Sir Dorabji Tata Trust would be paused or discontinued, according to sources.

Tata Sons and Tata Trusts did not immediately comment on the outcome of the board meeting.

The RBI classified Tata Sons as an "upper layer" non-banking financial company in September 2022 under its scale-based regulatory framework, a designation requiring listing within three years.

The deadline lapsed in September 2025 while Tata Sons' request to deregister as a core investment company - which would have exempted it from the listing rule - remained pending. The central bank rejected that application on September 11.

Chandrasekaran has led Tata Sons since 2017, when he succeeded Ratan Tata as interim chairman, following the board's ouster of Cyrus Mistry, and was reappointed for a second term in 2022.

His planned departure, announced to the board in August, followed months of friction with Noel Tata over the listing question and capital allocation at newer group ventures, including Air India, Tata Digital and BigBasket, which have posted losses.

The board first deferred a decision on his third term in February, after Noel Tata raised those concerns during a nearly three-hour meeting at Bombay House.

Tata Sons had been exploring succession candidates in anticipation of Chandrasekaran's exit, with reports naming Tata Steel chief executive TV Narendran, Tata Sons group chief financial officer Saurabh Agrawal, and National Stock Exchange chief executive Ashish Chauhan as contenders, alongside other internal names.

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