Noel Tata is in favour of extending Tata Sons chairman Natarajan Chandrasekaran’s tenure by two years instead of the usual five, a duration the Tata Trusts chairman believes will be sufficient to institute a new leadership structure and succession process at India’s largest conglomerate.
According to two executives aware of the matter, the Tata Trustees are expected to discuss a fresh truncated term for Chandrasekaran, as well as leadership structure for Tata Sons with separate roles of chairman, chief executive officer and managing director (CEO and MD) and deputy CEO.
The board of Tata Sons, which appointed Chandrasekaran as chair first in 2017 and extended it in 2022, on granting another term at its meeting on 24 February. The surprise development came after Noel Tata sought a clear roadmap for the performance of some of the new businesses launched under Chandrasekaran’s watch, including e-commerce, aviation and semiconductors. Without a fresh term, Chandrasekaran’s leadership of India’s largest conglomerate ends in February 2027.
Discussions soon
“Noel is seized of the developments. We expect to soon discuss and find an amicable way in the interest of the ,” one of the two executives said, adding that Noel remains hopeful discussions could start by next month.
“To start with, a succession plan has to be agreed upon. Along with succession planning, the structure of a non-executive chairman, a CEO and a deputy CEO at Tata Sons could also be considered. If everyone agrees, the incumbent chair can have a one or two-year tenure (post his completion of the current term) and by that time, you would have selected a successor,” the executive said on the condition of anonymity.
The executive expressed confidence that all Tata Trusts members would reach an agreement, since they understand the importance of having a successor to lead the Tata Group.
“We are hopeful that Venu and Vijay will agree and see what Noel is putting forward. Keep the issue of retirement age aside for now—The simple point is that Tata Sons can ill afford not to have a succession process,” the executive said.
Backing Chandra
TVS Motor Co. chairman emeritus and retired defence secretary Vijay Singh are the two Tata Trusts executives who have affirmed their faith in Chandrasekaran’s leadership and supported a third five-year term for him.
Noel is reconsidering his position after the two principal trusts under his chairmanship—Sir Ratan Tata Trust (SRTT) and Sir Dorabji Tata Trust (SDTT)—endorsed a third term for Chandrasekaran in July last year. At the time, the trustees had even agreed to relax the retirement age criteria. The philanthropic entities own 65.9% of Tata Sons, the holding company which runs and owns over two dozen listed companies, including Tata Consultancy Services Ltd, Tata Steel Ltd and Tata Power Ltd.
It remains unclear whether Noel’s perspectives will influence the decision-making process, or whether the Tata Sons board will take an independent position on the chairman’s potential third term.
Chandrasekaran, who turns 63 in June, is still two years away from the mandatory retirement age for all executive chairs of the Tata Group of companies. Noel Tata stepped down as managing director of Tata International in November 2021 upon turning 65.
Chandrasekaran, who joined the Tata Group in 1987 at Tata Consultancy Services, saw him take over as CEO of the information technology (IT) services firm in 2009, before he was drafted to lead Tata Sons in 2017. Under Chandrasekaran’s watch, Tata Sons has cut its debt and entered new businesses such as aviation, iPhone assembly and e-commerce.
Noel’s concerns
However, Noel voiced concerns about Tata Sons’ performance and the capital commitment required for its new bets. has invested over $11 billion in Air India, Tata Electronics, and Tata Digital. Some of these businesses are seen to have potential, Noel’s concern about them haemorrhaging cash and the lack of measurable benchmarks stems from surging losses and their dependence on parent Tata Sons, according to one executive.
Still, a third executive pointed out that the challenging financial landscape needs a leader like Chandrasekaran, who has the expertise and leadership to navigate these complexities.
Additionally, like other members of Tata Trusts and Tata Sons boards, Noel too is not in favour of Tata Sons being listed and wants the Tata Group’s holding company to remain private.
The six-member board of Tata Sons, chaired by Chandrasekaran, includes Noel Tata and TCS Chairman emeritus Venu Srinivasan as representatives of Tata Trusts. Tata Sons Group chief financial officer, Saurabh Agrawal and independent directors Harish Manwani and Anita Marangoly George.
Noel, who has long stayed in the shadow of his late elder half-brother Ratan Tata, is gradually assembling his team at Tata Trusts. In November, Noel’s son, Neville Tata and his trusted confidant Bhaskar Bhat joined the Sir Dorab Tata Trust. This has also been marked by departures of a few leaders: In October, businessman Mehli Mistry, followed by former Citibank CEO Pramit Jhaveri in February, concluded their terms at the principal Tata Trust.