In private conversations, Noel Tata floated the idea of having separate roles of chairman, chief executive officer and managing director (CEO and MD) and deputy CEO for Tata Sons, the person privy to the discussions said on the condition of anonymity. Currently, Tata Sons is led solely by chairman Natarajan Chandrasekaran.
However, the idea remained stillborn, as some trustees were lukewarm to the idea, the person cited above said.
Noel favoured Chandrasekaran continuing as non-executive chairman at Tata Sons after his current five-year term as chairman ends in 2027, and the trustees are in favour of a third term for the Tata veteran, the person added.
Apex body
Tata Trusts, the philanthropic organizations led by Noel Tata, hold a majority stake in Tata Sons, the principal holding company of the entire Tata Group. This ownership structure gives the Trusts significant influence over Tata Sons, which in turn acts as the promoter and investment vehicle for the various Tata companies and businesses operating in different sectors worldwide. Noel Tata took on the mantle of Tata Trusts last year after the death of Ratan Tata, the longtime chairman of Tata Trusts.
However, age stands in the way of a third term for Chandrasekaran — in another two years, he turns 65, the mandatory retirement age at Tata.
For this reason, at a board meeting of Tata Trusts in August, the trustees agreed that the Tata Sons board will raise the chair’s retirement age, enabling a third term for Chandrasekaran, who was chosen to lead Tata Sons in 2017.
Mint learns that the Tata Trusts’ consent to increase the retirement age for executive directors of Tata Sons will be limited to the chair, Chandrasekaran.
An email sent to Noel seeking comment went unanswered.
Term for Chandrasekaran
“So, essentially, the discussions centred on asking if the current chair should continue as non-executive chairman after the completion of his term in 2027 and a managing director from a Tata group company should take over as the Group CEO. A deputy CEO position was also to be created,” the executive said.
“But the discussions ended as we believed that there is merit in giving the chairman a fresh five-year term. The growth of Tata Sons has been commendable and a lot of investments in newer areas have been made, which need time.”
Noel, who turns 69 in November, was appointed chair of the Tata Trusts after his half-brother, Ratan Tata, passed away on 9 October. Besides Noel, TVS Motor Co.’s chair emeritus Venu Srinivasan and retired defence secretary Vijay Singh, there are five other permanent trustees of the Tata Trusts. A Pune-based businessman and philanthropist, Jehangir H C Jehangir, Ratan Tata’s brother Jimmy N. Tata, businessman Mehli Mistry, former Citibank India CEO Pramit Jhaveri, and a Mumbai-based lawyer, Darius Khambata, are the permanent trustees of Tata Trusts.
Chandrasekaran, who took over as the chair of Tata Sons in February 2017, has overseen the company reducing its borrowings by over ₹30,000 crore and making it debt-free. He has helped many of the 26 listed companies of the Tata Group become profitable, including Tata Steel and Tata Motors, while simultaneously initiating forays into new businesses, such as digital, aviation, and semiconductors.
Tata Sons board
Tata Trusts can nominate up to one-third to the board of Tata Sons. Currently, the Tata Sons board comprises six directors, following the retirement of independent director Ajay Piramal at 70 in August and Ralf Speth’s term ended on 9 September. Besides Chandrasekaran, Noel and Srinivasan, the three other members of the Tata Sons board are Group CFO Saurabh Agrawal and independent directors Harish Manwani and Anita Marangoly George.
As both Srinivasan and Noel are Tata Trust nominees on the board of Tata Sons, a second executive stated that the nomination of a third Tata Trust member does not currently arise.
None of these nominee directors have a specified retirement age; however, Tata Trusts evaluates the performance of its nominee directors on the Tata Sons board on an annual basis.
It was at this exercise undertaken last week, when retired defence secretary Singh was asked to resign by the majority of the trustees. Mint could not ascertain the reason.
Key Takeaways
- Noel Tata floats idea of a new leadership structure for Tata Sons
- This would mean separate roles of chairman, CEO and MD, and a deputy CEO.
- Trustees not favour of the new structure
- Trustees favor a third term for Chandrasekaran.
- Trusts ready to raise the retirement age for Tata Sons chairman.
