MUMBAI : Shares of several Tata Group companies fell sharply on Friday as a dispute over the reappointment of N Chandrasekaran as Tata Sons executive chairman and the future of a potential listing of the holding company unsettled investors.

Tata Chemicals was among the biggest losers, falling nearly 8% in intraday trade, while Tata Investment Corporation dropped around 5% and Tata Consultancy Services (TCS) declined more than 3%.

Tata Motors, Tata Elxsi and Tata Technologies were also trading lower as selling spread across several companies belonging to one of India’s largest conglomerates.

The declines reversed some of the gains seen a day earlier, when Tata stocks rallied after the Tata Sons board backed another five-year term for Chandrasekaran.

Investor sentiment shifted after differences emerged between the Tata Sons board and Tata Trusts, which controls about two-thirds of the privately held holding company.

Reappointment triggers dispute

At the centre of the disagreement is Chandrasekaran’s proposed continuation as executive chairman beyond his current term, which expires in February 2027.

The Tata Sons board approved his reappointment at a meeting on September 17, but Noel Tata, chairman of Tata Trusts, reportedly voted against the resolution.

Tata Trusts has questioned the validity of the decision, citing provisions in Tata Sons’ Articles of Association governing the role of Trust-nominated directors in major appointments.

The disagreement has raised uncertainty over the leadership of Tata Sons, which sits at the heart of the sprawling Tata Group and holds stakes in businesses ranging from information technology and automobiles to steel, power, aviation and consumer products.

Chandrasekaran has led Tata Sons since 2017 and has overseen a period of significant expansion and restructuring across the group.

Tata Sons listing back in focus

The boardroom dispute comes as Tata Sons also faces a crucial decision over whether the closely held company should eventually list on the stock market.

The issue stems from regulatory requirements following the Reserve Bank of India’s classification of Tata Sons as an upper-layer non-banking financial company.

Tata Sons has said it will work towards complying with regulatory requirements and consult shareholders and other stakeholders before deciding its next steps.

Tata Trusts, however, has argued that a stock market listing should not automatically be treated as the only available option and has sought a broader examination of alternatives.

A potential Tata Sons listing has attracted intense investor interest because of the holding company’s stakes in some of India’s biggest listed businesses, including TCS, Tata Motors, Tata Steel and Tata Power.

The prospect has also placed particular focus on listed Tata companies that own stakes in Tata Sons, with investors attempting to assess the potential value of those holdings in the event of an initial public offering.