N Chandrasekaran’s decision not to seek a third term as chairman of Tata Sons is being viewed as a clash of personalities at the top of India’s most respected conglomerate. But it is less of that and more of a failure of a governance model that has outlived the man who made it work. With the passing of Ratan Tata, it was obvious that Chandrasekaran would have to face and respond to questions that had earlier been settled by an authority unique to the Tata group.
Some of the hard questions that were put to him post-transition ranged from clarity on a five-year strategy, the continued losses at Air India and the steps to contain them, restraint on high-risk investment, an exit route for the Shapoorji Pallonji group, and an assurance that Tata Sons would remain unlisted.
One cannot find legitimate reasons to take exception to any of these conditions, and these are matters any controlling shareholder is entitled to raise. Air India’s accumulated losses since the 2022 takeover stand at roughly Rs 47,821 crore.
The Reserve Bank classified Tata Sons as an upper-layer non-banking financial company as far back as September 2022. At the same time, the Mistry family’s stake has awaited a resolution for years.
Governance Questions Remain
While the agenda was the same, there was no forum to address it. For two decades, similar questions were settled without much rancour by an individual whose authority over both the trusts and the holding company was never questioned.
That arrangement did not require any documentation and left none behind. Noel Tata, who assumed the chairmanship of Tata Trusts two days after Ratan Tata’s death in October 2024, had considerable operating experience but lacked that inherited authority.
In September 2025, four trustees blocked the continuation of a trust’s nominee on the Tata Sons board, arguing that the trusts were not receiving adequate information from their representatives on strategy, capital allocation and the performance of newer businesses.
The irony was evident: a shareholder that owns two-thirds of a company was reduced to obstructing a director from registering a complaint. When that failed to produce answers, the larger lever was used, and the chairman’s reappointment was withheld.
Successor Inherits The Challenge
These questions will now be passed over to Chandrasekaran’s successor. Solutions to these key issues will have to be found, along with any that might emerge, including losses posted by a clutch of listed entities under the Tata Sons fold. For that to happen, the board needs to act collectively.
The priority for Tata Sons, therefore, is not who will head it but establishing a clear governance framework that addresses issues such as what the trusts want and what the board decides; what information trustees should receive and how often; how disagreements are resolved as amicably as possible; and what a chairman may reasonably be asked to guarantee.
The group can ill afford to face a similar crisis again. The price of another such breakdown would be too high.
