Tata Sons' board on Thursday voted to reappoint N Chandrasekaran as chairman for a third five-year term, weeks after he told directors he did not intend to seek a third term, according to people familiar with the deliberations, in a scenario that would mark 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 non-banking financial company (NBFC) registration—a decision that would revive the prospect of a stock market listing that the company has tried to avoid for more than a year, including by repaying over Rs 21,000 crore in debt.
Board cites leadership continuity ahead of possible IPO
Sources said the board members reasoned that continuity of leadership would reassure prospective investors ahead of any listing process. Potential investors would seek assurance on management continuity once a company embarks on an IPO.
Chandrasekaran asked to reconsider August decision
The Nomination & Remuneration Committee will 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 votes against reappointment
Noel Tata, chairman of Tata Trusts, which along with affiliated trusts controls about 66 per cent of Tata Sons, voted against the reappointment but the resolution was carried by a majority, sources said.
He has been opposed to any listing, a position he has held since at least February, when it was reportedly among his conditions for backing Chandrasekaran's prior term renewal. Shapoorji Pallonji Group, which holds roughly 18 per cent of Tata Sons and is headed by Noel's father-in-law, has favoured listing.
After this, the Sir Dorabji Tata Trust's already-initiated chairman-selection process would be paused or discontinued.
Tata Sons and Tata Trusts have not commented on the outcome of the board meeting.