Business
oi-Prakash KL
Tata Consultancy Services (TCS) share price fell over 3% in early trade on Friday, as investors reacted to the latest standoff within Tata Sons.
The TCS stock dropped as much as 3.64% to Rs 2,116 on the BSE before recovering slightly. At around 9:45 am, shares were trading 2.70% lower at Rs 2,136.65.
TCS shares declined over 3% due to a Tata Sons leadership dispute where Tata Trusts opposed N Chandrasekaran’s chairman reappointment, while the holding company faces potential IPO considerations following an RBI decision.
The sell-off came a day after Tata Sons approved N Chandrasekaran’s reappointment as executive chairman for another five years. The decision, however, has triggered opposition from Tata Trusts, which holds around 66% of Tata Sons.
Tata Trusts chairman Noel Tata has opposed the board’s decision as the Trusts describing the reappointment resolution as “illegal”. The Trusts have maintained that their nominee directors must give their approval for the appointment of the chairman of Tata Sons.
The dispute also extends to the future of Tata Sons. The holding company had moved towards initiating the process for a proposed initial public offering after the Reserve Bank of India rejected its request to continue as a private, unlisted company.
Tata Trusts said the RBI’s communication was discussed at the Tata Sons board meeting on September 17. According to the Trusts, the board agreed that all available options should be examined immediately rather than proceeding with a listing alone.
The latest developments have added another layer to the ongoing debate over the structure and future of Tata Sons.
Noel Tata has also stressed the importance of preserving the Tata Group’s existing structure while pointing out to the role played by the Tata Trusts, which hold a majority stake in Tata Sons, and the flow of dividends from the group’s operating companies towards charitable activities.
The disagreement comes at a time for the conglomerate, with the RBI’s decision putting renewed focus on Tata Sons’ ownership structure and whether it will eventually have to pursue a public listing.
