Tata Sons puts N. Chandrasekaran’s reappointment on hold after board differences: Report

Tata Sons has deferred a decision on extending the tenure of chairman N Chandrasekaran, CNBC-TV18 reported on February 24, citing sources familiar with the matter. The report said Tata Trusts chairman Noel Tata was the only board member who did not support Chandrasekaran’s reappointment.

According to the channel, concerns were raised over mounting losses in some of the group’s newer ventures. While Chandrasekaran received backing from other directors, the divergence of views led him to seek a deferment to allow for wider consultation and consensus-building at the board level.

Last year, Tata Sons had approved a third executive term for Chandrasekaran through February 2027, when he will turn 65. The latest development introduces uncertainty around that extension, even though no formal decision has been announced.

Following the report, shares of Tata Investment Corporation fell 2.94% to ₹668 on the NSE at 3:40 pm, reflecting investor sensitivity to leadership developments at the holding company level.

Chandrasekaran has led Tata Sons since 2017, after the high-profile ouster of Cyrus Mistry. During his tenure, the group has undertaken an aggressive expansion and transformation strategy, including large investments in technology, electric vehicles, semiconductors, aviation and digital platforms.

The Economic Times reported that boardroom discussions centred on losses at certain greenfield ventures, an issue flagged prominently by Noel Tata. However, other directors reportedly argued that early-stage losses are typical for capital-intensive, long-gestation projects and should be viewed in the context of long-term strategic positioning.

In the group’s latest annual report, Chandrasekaran said that over the past five years, Tata Group nearly doubled its revenue and more than tripled net profit and market capitalisation, while investing ₹5.5 lakh crore to become “future fit.”

The leadership debate comes amid a mixed financial performance. Tata Sons reported a 24% rise in FY25 revenue to ₹5.92 lakh crore, but net profit declined 17% to ₹28,898 crore. The company noted that FY25 began with optimism around macroeconomic stability and easing inflation, but sentiment shifted as global trade policy uncertainty intensified.

What did Noel Tata say

At the board meeting, Tata Trusts chairman Noel Tata is understood to have flagged concerns over losses incurred by several of the Tata Group’s newer ventures, prompting an extensive discussion among directors, the ET report stated. Other board members, however, backed N Chandrasekaran’s reappointment, arguing that the losses reflect the nature of greenfield investments, which typically require a longer gestation period before turning profitable.

Sources indicate that Noel Tata outlined four key expectations that he believes should be met before any extension is finalised. First, Tata Sons should remain unlisted, in line with the Reserve Bank of India’s regulatory framework for so-called “upper-layer” non-banking financial companies, a category under which large conglomerates like Tata Sons fall.

Second, the chairman must ensure that the holding company remains debt-free. Third, there should be tighter oversight to prevent excessive capital expenditure on high-risk ventures that could strain the company’s financial reserves. Fourth, losses arising from major acquisitions—such as Air India and BigBasket—should be contained and brought under control before a fresh term is considered.