Daijiworld Media Network - Mumbai

Mumbai, Oct 31: Tata Trusts chairman Noel Tata has intensified efforts to push for discussions and decisions on major issues concerning Tata Sons ahead of the company's November 26 board meeting, sending a series of letters to directors amid an ongoing boardroom dispute.

Within a week, Noel Tata, who is also a nominee director on the Tata Sons board, has sent three letters highlighting contentious matters, including the proposed listing of Tata Sons, the reappointment of N Chandrasekaran as chairman and a Rs 25,000-crore funding proposal involving the Shapoorji Pallonji (SP) Group.

The latest correspondence follows a meeting between Noel Tata and Tata Sons chairman Chandrasekaran on October 25 at Noel's residence. The meeting was reportedly organised by former senior Tata Group executives in an attempt to resolve differences between the two leaders. However, sources indicated that the discussions failed to establish common ground, prompting Noel to raise the issues formally through letters to the board.

One of Noel's key demands is that the November 26 meeting take up a restructuring proposal aimed at keeping Tata Sons privately held and avoiding a stock market listing. He has also sought an immediate discussion on the SP Group's requirement to raise Rs 25,000 crore through a proposed capital reduction.

The restructuring proposal involves merging two operating subsidiaries, Tata Electronic Systems Solutions and Tata Consulting Engineers, into Tata Sons. The plan was outlined by Tata Trusts advisor Farokh N Subedar last month and subsequently submitted to the Tata Sons board and the Reserve Bank of India (RBI).

The objective is to change the asset structure of Tata Sons by bringing operating businesses directly under the holding company, potentially altering its regulatory classification and helping it avoid mandatory listing requirements applicable to upper-layer non-banking financial companies (NBFCs) and core investment companies (CICs).

In his October 29 letter, Noel specifically sought a discussion on the RBI's September 11 communication rejecting Tata Sons' application for voluntary deregistration as a CIC. He has requested a detailed management presentation on the proposed restructuring, followed by deliberations and a formal board decision.

The listing issue has emerged as a major point of disagreement among the shareholders. Tata Trusts, which holds a 66 per cent stake in Tata Sons, has opposed listing the holding company. However, some trustees have reportedly supported the proposal in recent discussions. The SP Group, the second-largest shareholder with an approximately 18.38 per cent stake, has maintained its support for listing.

The Rs 25,000-crore proposal relates to the SP Group's plan to monetise a portion of its shareholding in Tata Sons. The proposal envisages a selective capital reduction through which Tata Sons would buy back and cancel shares held by SP Group entities, with payments potentially made in two or more instalments over 18 months.

Noel has sought a detailed examination of the proposal, including its valuation, funding arrangements, legal implications and implementation process. He has also called for deliberation and voting on the relevant agenda items.

Chandrasekaran's third term under discussion

The October 25 meeting also reportedly discussed Chandrasekaran's possible reappointment for a third term after his current tenure ends in February 2027.

Noel is understood to have raised the group's retirement age of 65 years for executive positions. Chandrasekaran, who is currently 63, reportedly indicated that he was keen to follow company policy but wanted to complete certain important projects before stepping down.

The reappointment issue had already triggered disagreements at the September 17 board meeting. Noel subsequently questioned the procedure followed in approving Chandrasekaran's five-year extension and sought access to the meeting's audio and video recordings, voting details and relevant disclosures.

Neither Tata Sons nor Tata Trusts has officially commented on the October 25 meeting or the latest letters.

More meetings ahead

Sources said any Tata Sons director could request the inclusion of an agenda item at a board meeting by giving at least 15 days' notice.

Meanwhile, the board of Sir Dorabji Tata Trust (SDTT), a key entity of Tata Trusts, is expected to meet on November 21, ahead of the Tata Sons board meeting.

The Maharashtra Charity Commissioner is also expected to respond to Tata Trusts regarding governance-related matters involving Sir Ratan Tata Trust (SRTT), the second-largest shareholder of Tata Sons. The Commissioner's earlier action had frozen the decision-making powers of SRTT over alleged violations of provisions of the Maharashtra Public Trusts Act.

Tata Trusts had recently submitted its communication to the Charity Commissioner following complaints by certain trustees over governance issues.

The November 26 meeting is expected to be significant for the future ownership structure, regulatory status and leadership of the Tata Group's holding company.