ONE-AND-A-HALF years before the close of Tata Sons chairman N. Chandrasekaran’s second five-year term, the trustees of Tata Trusts made an unusual move. On July 28, 2025, they passed a resolution, approving extension of his tenure for another five years. But the extension did not come without conditions. The trustees asked him to work towards facilitating the exit of minority shareholder Shapoorji Pallonji (SP) Group from Tata Sons, and engage with the Reserve Bank of India (RBI) to ensure Tata Sons remains a private entity.

This was not the first time the Trusts — Sir Ratan Tata Trust & Allied Trusts and Sir Dorabji Tata Trust & Allied Trusts, which together hold 66% in Tata Sons — intervened in matters related to the group’s leadership. Earlier, such decisions were conveyed quietly, often through Ratan Tata himself. Under the chairmanship of Noel Tata, however, the trustees chose to formalise their stance, putting it on record with a resolution.

The move was both a show of faith and a reminder of unfinished business. Internally, it underscored Tata Trusts chairman Noel Tata and his fellow trustees’ confidence in Chandrasekaran. Externally, it signalled continuity at the top of India’s most diversified conglomerate. Since taking over in 2017, Chandrasekaran has been methodically rebuilding the group — addressing legacy issues whether in passenger cars, hotels, or telecom businesses; pushing companies into digital adoption; and seeding new businesses, including defence, digital, and airline. His “One Tata” vision has brought coherence across the vast sprawl, and his willingness to restructure and merge similar businesses has given the group a sharper focus.

While not without setbacks, he has earned the reputation of being a stabiliser. “He has devised the resurgence of group companies based on themes like simplification, synergy, and scale. He is quick in decision-making. It has resulted in the launch of new businesses like electric vehicles, SuperApp, semiconductor, and battery manufacturing,” says a Tata insider.

His third term, therefore, promises continuity but also heightened expectations. Beyond maintaining momentum, he must modernise Air India’s fleet, address slowing growth at TCS — the Trusts’ biggest source of dividend — and face intensifying competition in EVs, renewables, and e-commerce, where Reliance Industries and the Adani Group loom large.

But perhaps the most delicate task lies within — negotiating the SP Group’s exit, and ending a century-old association.

Bone of contention

The Mistrys’ ties with the Tatas date back nearly a century, rooted in finance, business, and a marriage. F.E. Dinshaw Ltd, a firm headed by a Parsi investor, had loaned over ₹2 crore to rescue Tisco (now Tata Steel) and Tata Hydro (now Tata Power). When repayments faltered, the debt was converted into a share of Tata Sons’ commissions and later converted into stake. In 1928, Shapoorji Pallonji Mistry bought into Dinshaw’s firm and gradually consolidated control. By 1978, the family owned it fully and renamed it Cyrus Investments.

Over time, the Mistrys’ influence grew. Pallonji Mistry secured a seat on Tata Sons’ board in the 1990s, and family ties deepened when Ratan Tata’s half-brother Noel married Pallonji Mistry’s daughter Aloo Mistry. The association reached its peak in 2011, when Cyrus Mistry became vice chairman of Tata Sons, followed by his elevation as chairman a year later. The partnership, however, took a catastrophic twist in 2016, when Cyrus Mistry’s ouster triggered one of India’s most bitter corporate battles. Reportedly, Mistry was reluctant to give away decision-making power to the nominees of the trusts.

For the trustees, oversight of Tata Sons is sacrosanct. Through their nominee directors, they can veto board decisions, appoint the group chairman and secure dividends needed to fund philanthropic initiatives. Such control is possible only if Tata Sons remains unlisted.

That authority was challenged in 2022, when the Reserve Bank of India classified Tata Sons as an “upper-layer” non-banking financial company (NBFC-UL), mandating a listing by September 2025. Chandrasekaran moved swiftly — he pared debt, and sought to surrender the NBFC–Core Investment Company (NBFC-CIC) licence — to ensure Tata Sons remained private. The central bank is still examining the application.

Another challenge for Chandrasekaran is negotiating the SP Group’s exit. The 18.37% holding is a financial lifeline for the Mistrys and a strategic headache for the Tatas. For the SP Group, monetising it is essential to easing its debt crisis. For Tata Sons, removing a minority shareholder whose stake is repeatedly pledged to lenders is crucial for long-term stability.

The difficulty lies in valuation. In 2020, the Mistrys pegged their stake at ₹1.75 lakh crore in a Supreme Court petition and proposed a pro-rata distribution of shares of listed companies to facilitate their exit and dodge the financial burden of a stake buy by Tata Sons. But the Tata parent company dismissed it, and quoted the value of the Mistrys’ stake at ₹70,000–80,000 crore. Harish Salve, appearing for Tata Sons, called the swap proposal “unacceptable,” though he confirmed Tata Sons was willing to buy out the Mistrys, given the risks of pledged shares.

For the SP Group, the urgency is acute. Burdened with ₹45,000 crore of debt in 2020, the group trimmed borrowings to around ₹20,000 crore by 2024, but by using the liquidity from pledged shares. In May 2025, it raised another ₹28,500 crore via high-cost three-year bonds at an annual yield of 19.75%, secured against a 9.2% stake in Tata Sons, and the SP Group’s real estate and energy assets. By 2028, the bond debt is expected to balloon to over ₹50,000 crore. Without a settlement, the financial survival of the SP Group’s businesses will be in question.

New troubles

Chandrasekaran’s leadership has also been tested by crises. He was in his fourth-floor office at Bombay House when news broke of the Air India crash in Ahmedabad. Without waiting for details, he rushed to the airport and flew to Gujarat on a chartered aircraft. According to insiders, he mobilised resources from 17 Tata companies to handle the disaster.

Though collective efforts were made, the tragedy scarred the Tata and Air India brands. “It was something like a personal tragedy for Chandrasekaran and the whole team rather than a concern in one of the businesses. Our own people and loyal customers lost their lives. There is no excuse, and [we] cannot do anything to correct it,” says a Tata executive. Air India’s fleet upgrade remains a pressing issue as well. The airline has begun a $400-million refurbishment of 67 aircraft and ordered 570 planes from Airbus and Boeing. But delivery delays cast a shadow on its turnaround.

At TCS, the challenge is subtler but equally pressing. In FY25, Tata Sons received ₹32,700 crore in dividend from TCS, down ₹1,333 crore from the previous year — the first such decline since the software giant went public in 2004. India’s largest IT exporter, which entered its slowest revenue growth phase in FY25, has decided to lay off around 12,000 employees as macro uncertainties and AI-led disruptions continue to affect demand.

For Tata Trusts, which depends heavily on the TCS dividend income to fund philanthropy, the decline is alarming. In addition, Tata Sons uses its share of dividend to fund new ventures directly. Having led TCS himself as CEO, Chandrasekaran is most suitable to find ways to reignite growth.

Elsewhere, Tata Steel’s transition to green steel in the U.K., and Tata Motors’ push in electric vehicles, are on the table as well. JLR’s ‘Reimagine’ strategy — turning Jaguar into an all-electric brand by 2025 and launching six Land Rover EV variants by 2030 — is crucial for future positioning.

Chandrasekaran remains bullish on new ventures. “Firstly, we want to pursue manufacturing excellence at scale. At Tata Electronics, we are building a vertically integrated ecosystem for technology hardware and semiconductor manufacturing,” he said in the FY25 annual report.

“We are not stopping at semiconductors or electronics hardware. At Agratas [the group’s EV battery firm], we are establishing 60 GWh battery capacity in India and the U.K.,” he added. Tata Power, too, is moving steadily away from thermal. “In the last eight years, Tata Power has quadrupled its renewables capacity, become a leader in solar rooftop installations, and set up 6,700 EV charging stations across India,” said Chandrasekaran.

Going ahead, the group is betting big on AI and digital platforms. “Together with TCS, startups and other ecosystem players, we will do whatever it takes to make India ready for the Gen AI era,” Chandrasekaran said. Tata Sons has already committed over $120 billion to new ventures, with an additional `30,000 crore earmarked for digital, defence, and Air India.

To sharpen focus, he has been realigning businesses. Tata Consumer Products was created by integrating Tata Tea and Tata Chemicals’ food businesses. Tata Capital was strengthened by absorbing Tata Motors Finance. The EV ecosystem is another example, where six Tata firms pooled resources to launch the venture.

At this critical juncture, Noel Tata and the trustees are clear that the man to navigate the group forward is Chandrasekaran. And the latter himself is under no illusions about the scale of the task. As he put it succinctly: “Every day will not be the same, but each day will demand the best of us.”