Tata Sons has named Natarajan Chandrasekaran as its new chairman. An official announcement is expected shortly. Chandrasekaran, who is the chief executive officer of Tata Consultancy Services Ltd, will take over as the head of the $103-billion salt-to-software conglomerate from interim chairman Ratan Tata.
Ratan Tata had returned at the helm of the group’s holding company after the ouster of Cyrus Mistry as Tata Sons chairman on 24 October 2016.
Chandrasekaran, a Tata Group insider and now its seventh chairman, has been with the group from 1987 when he joined TCS after completing masters in computer applications from Regional Engineering College, Trichy, Tamil Nadu. He took over as the chief executive officer and managing director of TCS in October 2009. Prior to that, he was the chief operating officer of the company.
Chandrasekaran has also served as the chairman of the industry body National Association of Software and Services Companies (NASSCOM) in 2012-13.
Tata Consultancy Services, in which Tata Sons holds 73.26 percent stake, is the biggest contributor to the group’s revenue.
The 80-Day Battle
N Chandrasekaran’s appointment was preceded by a long power conflict between ousted chairman Cyrus Mistry and Tata Sons, the holding company of the Tata group companies.
The Tata Sons board, on 24 October, passed a resolution to remove Cyrus Mistry as the chairman of the company, on the grounds that the board had lost confidence in his abilities. Six members voted in favour of his ouster while two abstained.
The group executive committee formed by Mistry to oversee governance was also dissolved.
Chairman Emeritus Ratan Tata took over as interim head for the next four months. The Tata Sons board also set up a 5-member committee to select the next chairman within this period. The selection committee comprised Ratan Tata, Ronen Sen, Amit Chandra, Lord Kumar Bhattacharya and Venu Srinavasan.
This triggered one of the most vicious corporate battles witnessed in the country, with Mistry refusing to vacate his position on the boards of various Tata group companies.
Both parties traded accusations in the following eight weeks. A few independent directors of Tata companies got involved, affirming their full faith in Mistry.
This led to Tata Sons, the principal shareholder of Tata Group companies, requisitioning extraordinary general meetings for removing Mistry from the board of the companies. Tata Sons also sought the removal of Nusli Wadia, independent director on the board of three Tata companies, who had backed Mistry.
On 13 December, Tata Sons scored its first boardroom victory after shareholders voted to remove Mistry from the board of Tata Consultancy Services in the first such EGM.
Cyrus Mistry on 19 December announced his resignation from the board of all six listed Tata companies, but said he would continue to be a board member of Tata Sons, in which his family owns 18.2 percent stake.
The battle then shifted to the country’s courtrooms.
Two investment firms run by the Mistry family approached the National Company Law Tribunal in December last year, alleging mismanagement by Tata Sons. The tribunal asked Mistry to provide more documented evidence to prove alleged fraud and malpractice at Tata Sons. The case is pending, with the next hearing scheduled for 31 January 2017.
Wadia too filed a criminal defamation suit on 23 December 2016, saying that Tata Sons had defamed his reputation by printing and publishing “false, frivolous, baseless, incorrect, libellous and defamatory material”. The case is likely to be heard in March.
Tata Sons has also convened an EGM for Mistry’s removal from the board of the holding company. The meeting is scheduled for 6 February 2017.
(This article was originally published in BloombergQuint)
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