Tata Sons chairman N. Chandrasekaran to step down in February 2027

Tata Sons chairman N. Chandrasekaran will step down at the end of his current term in February 2027, he said on Wednesday, citing a six-month standoff with a Tata Sons board member who blocked his reappointment as chair of the Tata Group’s holding company. Though Mr. Chandrasekaran did not name the dissenting Board member in his statement, it is learnt that Tata Trusts chairman and Tata Sons board member Noel Tata had not cleared his reappointment.

Mr. Chandrasekaran has spent 40 years with the Tata Group and nine critical years at the helm of the conglomerate, the first non-Parsi to hold the post. His announcement sparked a sell-off in Tata Group stocks, led by Tata Consultancy Services, which fell 3.71% on the BSE.

“Earlier today, I have communicated to the Tata Sons Board, that I have decided not to offer myself for reappointment when my term ends on February 20, 2027. I have asked the Board to decide on the succession soon to ensure a proper transition,” Mr. Chandrasekaran said in a statement.

Succession process

A selection committee will soon be set up to find Mr. Chandrasekaran’s successor and will comprise two external members, two members from Tata Trusts, and one from Tata Sons, people familiar with the process said.

Several names are doing the rounds, including Mr. Noel Tata, 69, and his son Neville Tata, 32, who leads Tata retail businesses such as Westside, Zudio, and Star Bazaar and who is a trustee in many Tata Trusts. Though Mr. Noel Tata may become interim chairman till a successor is found, he is unlikely to be appointed the full-time chairman as he will soon turn 70. Also, since he is already chairman of Tata Trusts, he cannot hold a dual position.

Tata group insiders who may be considered include Tata Steel MD & CEO T.V. Narendran and Jaguar Land Rover CEO P.B. Balaji.

Governance impasse

Tata Sons is the principal investment holding company and promoter of the Tata Group. The Tata Trusts collectively own about 66% of Tata Sons, giving the philanthropic arm decisive influence over the group’s governance.

According to Mr. Chandrasekaran’s statemement, the Sir Dorabji Tata Trust and Sir Ratan Tata Trust, which together hold 51.54% of Tata Sons had unanimously resolved and recommended that he be given a third five-year term as chairman. This was recorded and recommended by the Tata Sons Nomination and Remuneration Committee and tabled in the Tata Sons board meeting on February 24.

“However, the proposal was not carried through because one of the Board Members did not support it, and in the absence of unanimous support, I chose to defer the decision,” he said. It is understood that Mr. Noel Tata is the dissenting board member. “It has been six months since that Board meeting, and no resolution has been reached till date,” he added.

‘Leadership clarity is key’

“Tata Sons is a very large institution and there are many strategic projects that are under critical stages of execution,” Mr. Chandrasekaran said. “It is not only necessary to have a leader in place to lead the Group beyond Feb 2027, but also clarity on leadership is important for employees, investors, partners and other stakeholders,” he said, explaining the circumstances that led him to his decision.

Noting that he had completed 40 years of professional life at the Tata Group, he said he was grateful for the immensely satisfying opportunity to contribute to such a venerable institution. “Leading Tata Sons over the past decade has been a great honour and a profound responsibility,” he said. Mr. Chandrasekaran, who had joined the Tata Sons board in October 2016, was designated chairman in January 2017 and took official charge in February 2017 in the aftermath of the sacking of Cyrus Mistry as chairman of Tata Sons.

Soon after Mr. Chandrasekaran made his decision public, the stocks of Tata Group companies fell, indicating the nervousness of investors. Tata Consultancy Services (TCS) led the losses, sliding 3.71% to ₹2,349.70 on the BSE. Tata Steel fell 1.57% to ₹185.45; Tata Motors Passenger Vehicles was down 1.92% to ₹342.30; Tata Elxis dropped 2.23% to ₹3724.95; and Tata Technologies fell 2.81% to ₹840.75.

(With inputs from PTI)