Tata Sons Power Struggle Deepens as Chandra’s Return a Setback for Noel

Chandra’s Return Boosts Tata Stocks But Deepens Power Struggle at the Group Good morning... I’m Pratigya Vajpayee in New Delhi, wrapping up the week in markets for you. Tata Group shares stole the show in an otherwise lackluster session on Thursday. They are likely to stay in the spotlight today as well after Tata Sons’ board said it would pursue a stock listing and give its chairman another five-year term despite strong opposition from the founding-family patriarch (more on that below). Meanwhile, India’s benchmark NSE Nifty 50 Index continues to struggle. The gauge is on course to extend a five-week losing streak as foreign funds remain net sellers. In the bond market, yields rose after the central bank sold 500 billion rupees of bonds to drain excess cash from the financial system. Investors will be hoping positive regional cues lend support. Asian stocks and bonds have edged higher early on Friday as a pullback in oil prices eased inflation concerns. The region’s biggest event today is the Bank of Japan’s policy decision. The central bank is set to raise its benchmark interest rate, delivering its most closely spaced rate increases since 1990. In today’s newsletter, we write about: The Tata Sons board on Thursday approved going public by a majority vote and asked Chairman Natarajan Chandrasekaran to stay on for five more years. But the listing and succession saga at India’s oldest conglomerate may have more twists and turns in store. The board’s decisions are a sharp setback for patriarch Noel Tata, who has long fought to keep the holding company private. While Chandrasekaran, widely known as Chandra, agreed to stay on, Tata Trusts — the controlling shareholder of Tata Sons led by Noel — called the board’s decision on his reappointment “illegal.” In a separate statement late on Thursday, the Trusts — a group of 13 charities — said they had not agreed to a listing and that the company’s board had to explore all available options. That sets the stage for a showdown. A public float would bring far greater regulatory and market scrutiny to Tata Sons. For Tata Trusts, the move risks diluting its ability to fend off any hostile takeover attempts. For minority shareholder Shapoorji Pallonji Group, however, it provides a path to monetize its holding and reduce costly debt. At the same board meeting, Noel had presented a proposal from the SP Group to monetize part of its stake in Tata Sons in a deal that would raise at least 250 billion rupees ($2.6 billion), according to the Tata Trusts’ statement. The proposal envisages a share buyout in two tranches over 18 months, with Noel suggesting the funds could come from internal cash flows, sales of listed shares or stakes in newer businesses. Despite the power struggle, group stocks reacted positively to the developments on Thursday. Tata Chemicals jumped more than 13% to a four-month high. Tata Motors Passenger Vehicles climbed as much as 6.3%, while Tata Consultancy Services rose 3.4%. Tata Investment Corp. surged 7.6%.