By Aditya Kalra and Chandini Monnappa
NEW DELHI, Aug 12 (Reuters) - The chairman of India's largest conglomerate Tata Sons will not seek reappointment, he said, citing the board's lack of backing after tensions with the charitable arm that controls the group.
N. Chandrasekaran's decision to leave in February adds to the difficulties of the 158-year-old group that faces mounting losses at airline Air India, a sharp decline in sales for its Jaguar Land Rover car business and was forced to revamp processes
after a data leak at its electronics arm that affected clients Apple and Tesla.
Disagreements have simmered over recent months between Chandrasekaran, 63, and Tata Trusts, which owns 66% of Tata Sons. The two sides have clashed over issues including whether Tata Sons should be listed, the losses at Air India and how to handle the planned exit of a minority shareholder.
In February, Tata Sons — which controls more than 30 Tata companies, including IT firm TCS, Tata Motors and Air India — postponed a decision on reappointing Chandrasekaran as chairman after Noel Tata, chairman of Tata Trusts, opposed the move.
"It has been six months since that board meeting, and no resolution has been reached till date," Chandrasekaran said in his statement.
"Tata Sons is a very large institution and there are many strategic projects that are under critical stages of execution ... clarity on leadership is important for employees, investors, partners and other stakeholders," he added.
Tata Trusts did not respond to a Reuters request for comment.
A source with direct knowledge of his decision, who declined to be identified, said the disagreements between Chandrasekaran and the Tata Trusts were the sole reason for his resignation.
Shares in TCS, where Chandrasekaran built his career, closed down 4%, while Jaguar Land Rover-parent Tata Motors fell 1.3%. Tata Steel lost over 1%.
"Under Chandrasekaran, the group has scaled profits substantially. However, some parts are also making substantial losses in areas such as Air India, digital and e-commerce," said Deven Choksey, managing director of a Mumbai-based financial services firm.
TATA HAS EXPERIENCED DISAGREEMENT BEFORE
Over the years, Tata, India's largest conglomerate by market capitalisation, acquired Jaguar Land Rover, British tea firm Tetley, and last year said it had agreed to buy European company Iveco's trucks and bus business in a $4.36 billion deal. Tata also runs hundreds of Starbucks outlets as a partner of Starbucks India.
Relations between Tata Sons and Tata Trusts have been turbulent in the past and in 2016, Tata Sons' board sacked the then-chairman after he fell out with group patriarch and charity arm's head Ratan Tata over corporate governance issues.
Tata products, ranging from salt, tea and pulses to cars and hotels, are found almost everywhere in India.
In the last financial year, Tata Group companies had combined revenue of $185 billion. The 26 that are publicly listed had a combined market capitalisation of $277 billion as of March 31.
Chandrasekaran joined the Tata Group in 1987 as an intern at TCS and spent his entire corporate career at the IT giant, rising through the ranks to become CEO in 2009, before taking over as Tata Sons chair in 2017.
The Tata family are descendants of Persians who first landed in India in the eighth century. Chandrasekaran, widely known as Chandra, is not related to the Tata family and was the first non-Parsi chairman of Tata Sons.
(Reporting by Aditya Kalra in New Delhi and Chandini Monnappa in Bengaluru; Additional reporting by Chris Thomas in Mexico City; Editing by Edwina Gibbs and Barbara Lewis)
