Tata board fight sets up lose-lose stalemate

Tata Consultancy Services

18/09/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Shritama Bose
MUMBAI, Sept 17 (Reuters Breakingviews) - No chair of a company can govern effectively without the backing of a majority shareholder. Trying to do so at a $260 billion conglomerate whose interests span steel to chips to IT and whose revenues equal roughly 5% of India's GDP is not just untenable, but potentially ruinous for all concerned.
That's the astonishing drama unfolding at the Tata group. The 158-year-old conglomerate's privately-held holding company, Tata Sons, on Thursday awarded N. Chandrasekaran a third five-year term, just weeks after he voluntarily quit citing the lack of unanimous board support. Its 65% owner, the Tata Trusts, led by Noel Tata, part of the wider Tata family, promptly dismissed Chandra's return as illegal.
It sets up a protracted showdown. Shareholders of Tata Sons, which owns stakes in listed companies from Tata Consultancy Services to Tata Motors, will sooner or later have to approve Chandra's reappointment at a shareholder meeting. That may not happen any time soon because a bizarre order by a state authority has barred trustees of Sir Ratan Tata Trust, one of the two largest trust shareholders, from convening meetings. Chandra's current term runs to February.
If the Trusts which use their dividends to fund philanthropy were to vote today, Chandra would be unlikely to win the required support. A long standoff however will test the unity of the Trusts as their own boards not only include Noel and his son, Neville, but also known Chandra supporters such as Venu Srinivasan, who also sits on Tata Sons' board and voted in favour of the reappointment. In time, it's possible that more board members will change their positions.
The stalemate will hurt India in a couple of ways. The two main trusts also theoretically hold veto rights over the Tata Sons board's decisions, including on any ⁠investment of more than 1 billion Indian rupees, a paltry sum of $10 million. That could make it harder for its struggling carrier Air India to secure a sought-after capital lifeline and crimp fresh spending into Tata's other unlisted ventures from chipmaking to batteries which New Delhi is keen to advance to catalyse economic growth.
It's also a red flag for foreign investors undecided about committing to India. The standoff between Chandra and Noel has its roots in an order by the Reserve Bank of India to take Tata Sons public, which the regulator is now trying to enforce. Chandra appears to have overreached but excessive official meddling in a private business is also to blame.
Going forward, Tata not only needs new leadership that can unite the board and ultimate owners, but also a new leadership structure, including a separation of the chair and CEO roles to shore up its governance. A stalemate is in nobody's interests but, for now, it seems inescapable.
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CONTEXT NEWS
The board of Tata Sons on September 17 said it had approved by majority vote a third five-year term for N. Chandrasekaran as executive chairman. Tata Sons is the holding company for India's Tata conglomerate.
The development reverses Chandrasekaran's decision, announced on August 12, to not seek reappointment. He cited the absence of unanimous support from the board.
Tata Sons' majority shareholders, Tata Trusts, responded to the reappointment in a statement, dismissing it as "illegal".
The Trusts said Tata Sons' articles of association require both of the Trusts' nominee directors to the Tata Sons board to vote in favour of the chair. Noel Tata, one of the nominees and chair of Tata Trusts, voted against the proposal and that makes the reappointment void, the statement added.

(Editing by Una Galani; Production by Oliver Taslic)
((For previous columns by the author, Reuters customers can click on BOSE/shritama.bose@thomsonreuters.com))