Deferral of Chandrasekaran's reappointment raises questions on Tata Trusts resolution on his tenure

New Delhi, The deferral of Natarajan Chandrasekaran's re-appointment for a third term as Chairman of Tata Sons has raised questions over a unanimous resolution passed last year by trustees of Tata Trusts recommending an extension of his tenure, according to group observers.

At a board meeting on Tuesday, Tata Sons deferred a decision on Chandrasekaran's continuation, signalling potential differences within the holding company of the salt-to-software conglomerate.

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Tata Trusts Chairman Noel Tata is learnt to have set several conditions for Chandrasekaran's re-appointment, leading to the postponement. He reportedly raised concerns over losses in certain group companies, including Air India, and flagged risks associated with heavy capital expenditure in semiconductor and battery ventures. He is also understood to have sought assurances that Tata Sons would not pursue a stock market listing.

"It definitely raises questions on the validity of the unanimous resolution passed by the trustees of Tata Trusts last year recommending a third term for Chandrasekaran," a person familiar with the matter said, adding, "Can a nominated director of Tata Trusts go against the unanimous decision of the trustees?"

Tata Trusts did not respond to queries on whether the resolution had been revoked or whether a nominee director on the Tata Sons board could unilaterally diverge from the trustees' decision.

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However, a source with direct knowledge of the matter said the resolution "clearly stands" and was taken unanimously after due deliberation.

"What Noel Tata did was within his capacity as a director of Tata Sons and was not necessarily against the resolution of the trustees. The resolution will be implemented in due course," the source said.

Tata Trusts collectively hold a majority 66 per cent stake in Tata Sons, which controls the over USD 180 billion Tata Group with interests spanning automobiles, steel, software, aviation and emerging sectors such as semiconductors.

Last year, infighting in Tata Trusts had reached the government with the top brass of the Tata group, including Noel Tata and Tata Sons Chairman N Chandrasekaran, meeting Union Home Minister Amit Shah and Finance Minister Nirmala Sitharaman.

Subsequently, government told the trusts to resolve the issue amicably and not let their differences spill in the public, considering the significance of the Tata Group on India's economy.

Also read: Noel Tata, board clash on term three for Chandrasekaran; issue deferred



In January, a proposed board meeting of the Sir Ratan Tata Trust (SRTT), which was supposed to take up the appointment of Neville Tata, son of Tata Trusts Chairman Noel Tata, as a trustee was cancelled understood to be due to lack of quorum.

The cancellation of the meeting came over two months after the failure of the first attempt to induct Neville Tata on the board of SRTT, which holds 23.6 per cent in Tata Sons, the promoter holding firm of the over USD 180 billion Tata Group.

Last year in November, Neville Tata and former group company leader Bhaskar Bhat were appointed to the Sri Dorabji Tata Trust (SDTT), which owns 28 per cent in Tata Sons. However, they couldn't be appointed to the Sir Ratan Tata Trust (SRTT), which holds 23.6 per cent in Tata Sons. Other Tata-affiliated trusts own 13.8 per cent in Tata Sons.