Tata Sons’ critical board meeting on May 26: All eyes on N Chandrasekaran's reappointment; what to expect

The Tata Sons’ board meeting scheduled to be held tomorrow, May 26, is important for many reasons. Right on top is the reappointment of N Chandrasekaran as Chairman, a decision that did not go through at the last meeting on February 24.

What is likely to come up for discussion at tomorrow’s board meeting? 

Here are a few points:

Reappointment of N Chandrasekaran as Tata Son’s Chairman: Chandra, as he is known, took charge in February 2017 for a five-year period, before that was renewed in 2022 for another five years. The current term comes to an end next February and to that extent, there is time. However, the fact it did not go through earlier this year, does make it a little interesting. At the centre of all this is Noel Tata, Chairman of Tata Trusts and Ratan Tata’s half-brother.

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The Noel Tata factor: Tata Trusts holds 66 per cent of Tata Sons’ equity. Plus, it can nominate one-third of Tata Sons’ board. Noel Tata and Venu Srinivasan, TVS Motor’s Chairman Emeritus are its nominees. Tata took over as the boss of the trusts in October 2024 after he was unanimously elected. Since then, Srinivasan and he have had serious differences, with the listing of Tata Sons’ being the most contentious. Tata has opposed it, while Srinivasan and Vijay Singh, the ex-Defence Secretary (both Tata Trusts’ vice-chairmen) have backed it
 
The Noel Tata-Chandra piece: At the last board meeting of Tata Sons’ Tata has specifically raised questions on the high-capex for new businesses – semiconductors being one of them – and the losses incurred in Tata Digital and Air India. Srinivasan and others on the board backed Chandrasekaran and said these are business with long gestation periods. In the spirit of Tata Sons, a decision as important as a reappointment must be unanimous and this disagreement complicated matters. Plus, Tata was clear that Tata Sons. The group’s holding company must remain unlisted. With the RBI’s new set of rules, that is looking challenging.

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Impact on Chandra’s reappointment: In the midst of all this, the question is how this will play out. Will Chandra get a five-year term or two years till he turns 65 (that is in 2028) or will the whole thing be deferred again? Finally, there is the Srinivasan factor. His own reappointment to Tata Trusts is scheduled to come up for renewal and that meeting has been pushed twice. Given that his term at two smaller trusts did not go through, there is no saying what will now happen. Besides, if he does not make it for another term at Tata Trusts, his position on Tata Sons’ board will be tenuous.