Strategy, governance differences delay clarity on term extension for Tata’s N Chandrasekaran

The board of Tata Sons has postponed a decision on extending Natarajan Chandrasekaran’s tenure as chairman, after new conditions were raised by Noel Tata, according to people familiar with the discussions.

Chandrasekaran’s current term runs until February 2027. Directors had been considering granting him a third term when Noel Tata, who chairs Tata Trusts, is understood to have set out a series of stipulations. Tata Trusts owns roughly two-thirds of Tata Sons, giving it decisive influence over the holding company.

Sources said Noel Tata expressed concern over losses at certain group companies and the prospect of Tata Sons increasing its debt, which could trigger a mandatory stock market listing. He is also said to have sought written assurances that the holding company would not be listed.

The lengthy board meeting at Bombay House, the group’s Mumbai headquarters, saw detailed deliberations on the reappointment. None of the other directors present — including Venu Srinivasan, Harish Manwani, Anita George and Saurabh Agrawal — reportedly objected to extending Chandrasekaran’s tenure.

At one stage, some directors suggested putting the matter to a vote. However, Chandrasekaran requested that the decision be deferred, a request the board accepted. Speaking briefly to reporters afterwards, he declined to discuss the meeting’s substance but said “nothing changes” for Tata Sons.

The postponement has revived memories of the high-profile 2016 dispute between Tata Sons and Tata Trusts that culminated in the removal of then chairman Cyrus Mistry, denting the reputation of one of India’s most prominent business groups.

The issue of a potential listing adds another layer of complexity. Under regulations issued by the Reserve Bank of India, a group of core investment companies, including Tata Sons, were given a deadline of 30 September 2025 to list their shares.

Tata Sons has applied to surrender its core investment company registration in an effort to avoid the requirement. The central bank has yet to decide on the application, though Governor Sanjay Malhotra has indicated that an entity may continue operations until its registration is formally cancelled.

Chandrasekaran, 62, joined the Tata group in 1987 and rose to become chief executive of Tata Consultancy Services before taking over as chairman of Tata Sons in 2017. He is widely credited with leading a period of restructuring and consolidation across the conglomerate. During his tenure, the group’s 15 largest listed companies have nearly doubled their combined revenues and profits.

His leadership has included ambitious strategic moves, such as plans for India’s first domestic semiconductor fabrication plant and the acquisition and turnaround of Air India. He has also overseen the technology arm’s response to rapid advances in artificial intelligence.

Founded in 1868 by Jamsetji Nusserwanji Tata, the Tata group remained under family leadership for much of its history. Ratan Tata stepped down as chairman in 2012, handing control to Cyrus Mistry of the Shapoorji Pallonji Group, before the relationship broke down four years later. Following Ratan Tata’s death in 2024, his half-brother Noel Tata assumed the chairmanship of Tata Trusts.

The Shapoorji Pallonji Group retains an 18 per cent stake in Tata Sons and has previously advocated a listing of the holding company, making it the largest minority shareholder.

In recent months, Chandrasekaran has also faced operational challenges across the portfolio, including regulatory scrutiny of Air India after a fatal crash, pricing pressure at Tata Consultancy Services, and disruption at Jaguar Land Rover following a cyberattack that affected production in the UK.

There is no indication yet of when the Tata Sons board will revisit the question of Chandrasekaran’s reappointment. People close to the matter suggest the issue will return to the agenda once further discussions have taken place and a clearer path forward has emerged.

With PTI input