'Chandrasekaran wanted a five-year extension, but the Tata Group has a policy of 65 years as the retirement age for its executive chairman.'
Key Points
- 'They need to zero in on a successor, particularly because Chandrasekaran's current term ends in February 2027.'
- 'Whatever Chandrasekaran could do, he did a good job.'
- 'The differences between Tata Trusts and Tata Sons have played out.'
Natarajan Chandrasekaran's decision to step down as as chairman of Tata Sons has come as a surprise.
It has also raised several questions about the future of the Tata Group.
His exit comes months after the Tata Sons board deferred a decision on his reappointment, due in February 2026.
The development has once again brought the differences between Tata Trusts and Tata Sons into focus.
Chandrasekaran has been at the helm of the group during a period of major change when the group has expanded into new businesses. These include digital, semiconductors and e-commerce. It has also taken on the challenging task of integrating Air India into the group.
At the same time, some of these new businesses have required large investments.
The group is also facing challenges in some of its established businesses.
What led to Chandrasekaran's exit?
Was his tenure the main issue?
Did differences over strategy and investments play a role?
And, what lies ahead for the Tata Group?
In an interview with Syed Firdaus Ashraf/Rediff, Shriram Subramanian, Founder and MD, InGovern Research Services, assesses Chandrasekaran's performance and the possible succession at Tata Sons.
Chandrasekaran's Resignation and Tenure
How do you view Tata Sons Chairman N Chandrasekaran's resignation?
The timing of his resignation is unexpected. However, at the February 2026 board meeting, his reappointment was deferred.
There was clearly some disagreement at the time, and it now appears that the differences between Tata Trusts and Tata Sons have played out.
What was the core issue? Is there a 'Noel Tata problem' with Chandrasekaran?
The core issue is Chandrasekaran's tenure. He wanted a five-year extension, but the Tata Group has a policy of 65 years as the retirement age for its executive chairman.
Therefore, there was a challenge in extending his tenure by another two years.
(Chandrasekaran turned 63 on June 2, 2026.)
I think the age issue was one of the contentious points.
RBI Classification and Future Strategy
He wanted to list Tata Sons, while Tata Trusts did not. Was that also a bone of contention?
Any logical person would understand that this is beyond the control of anyone on the Tata Sons board.
It is the regulator that classified Tata Sons as an upper-layer NBFC.
Therefore, you cannot hold Chandrasekaran responsible for this.
What do you foresee for the future of the Tata Group?
The board and the Nomination and Remuneration Committee of Tata Sons need to zero in on a successor, particularly because Chandrasekaran's current term ends in February 2027.
There are about six months left, and if they identify a successor soon, the transition can be much smoother.
It would give the outgoing and incoming executive chairmen sufficient time to hand over responsibilities and ensure continuity.
Performance and Succession Outlook
How would you assess his performance as Tata Sons chairman?
There has certainly been a charging-up of the company under his leadership.
However, there have also been challenges, including Air India.
New businesses such as Tata Digital and semiconductors have not been easy to build and operate.
These unlisted businesses will continue to be a challenge in the future.
At the same time, TCS is facing headwinds. So, whatever Chandrasekaran could do, he did a good job.
Is it true that he was focusing more on Tata Digital and future businesses, resulting in a significant cash burn and consequently making Tata Trusts unhappy?
One does not want to be left out of the e-commerce race of the future.
However, the investments could perhaps have been managed better, particularly in terms of fiscal allocation.
So, I do not think this was the only contentious issue.
How did he perform for Tata shareholders?
The management teams of individual listed Tata companies are different.
Chandrasekaran was working for the shareholders of Tata Sons in his capacity as the executive chairman of Tata Sons.
Overall, I would say he has done a reasonably decent job.
What do you think of Noel Tata? What role will he play?
I do not think Noel Tata will replace Chandrasekaran.
If he does, it would be a real surprise.
