Tata Sons board to discuss Chandra’s future after RBI listing decision

The board of Tata Sons, the holding company of the Tata Group, is set to meet Thursday to discuss its response to the Reserve Bank of India’s rejection of its request for an exemption from a mandatory listing, including whether Chairman N Chandrasekaran should reconsider his decision to step down.

Bloomberg reported that the company’s Nomination and Remuneration Committee is expected to recommend that Mr. Chandrasekaran stay on. The recommendation was added to the board meeting agenda at the last minute, according to people familiar with the matter, who asked not to be identified because the discussions are private.

Chandrasekaran, widely known as Chandra, said last month that he planned to leave when his current term ends in February. His planned departure followed months of reported differences with Tata Trusts Chairman Noel Tata over the proposed listing and the allocation of capital across the conglomerate.

The RBI’s rejection of Tata Sons’ request has added urgency to the board’s deliberations. Tata Sons had sought an exemption from the listing requirement, which would subject the holding company to greater regulatory scrutiny and require it to make more financial and governance information public.

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A listing would bring greater transparency to the finances and governance of businesses ranging from steel and automobiles to software, airlines and consumer goods. It could also affect the influence of Tata Trusts, the charitable entities that control Tata Sons.

The Tata Group has defended its existing ownership structure, arguing that it allows the conglomerate to take a long-term approach to its businesses without the pressures of public markets. The group generates about $185 billion in revenue and controls more than two dozen listed companies. It has also committed to producing semiconductors in India as the country seeks to build a domestic chip industry.

The RBI has filed a caveat in the Bombay High Court after rejecting Tata Sons’ exemption request, according to the Economic Times. The filing would ensure the central bank gets an opportunity to present its case before the court passes any interim order if Tata Sons challenges the decision.

The listing requirement has also been a longstanding demand of the Shapoorji Pallonji Group, Tata Sons’ largest minority shareholder. The group owns an 18.4% stake in Tata Sons and has pushed for a listing as a way to unlock value from its investment.