ON THE MORNING of August 12, when Tata Sons chairman N. Chandrasekaran walked into Bombay House, there was already a sense that something unusual was about to happen. About an hour later, after he entered his corner office on the fourth floor, an email announcing his decision not to seek reappointment began making its way to the inboxes of Tata Sons’ board members. Some of Chandrasekaran’s confidants had prior knowledge, but the news came as a shock to Tata Trusts chairman Noel Tata.

“Is this Cyrus Mistry Part 2 unfolding?” some wondered, while others whispered about what had transpired at the heritage headquarters. The parallel with Cyrus Mistry’s exit was difficult to ignore, 10 years after another Tata Sons chairman stepped aside following differences with another Tata over strategy, capital allocation, and governance. In his resignation letter, Chandrasekaran pointed fingers at Tata, saying that “one of the board members did not support” the extension of his term for another five years.

Chandrasekaran remained sanguine for some time that day, then turned to his commitments and walked into a Tata Motors board meeting with a light laugh. The board had convened to discuss robust commercial vehicle growth, but the mood was inevitably coloured by uncertainty over what comes next.

After the meeting, Chandrasekaran decided to speak directly to employees. He asked executives and staff at Bombay House to gather at 3.30 p.m. at the Starbucks on the ground floor. Around 100 employees turned up. Chandrasekaran was on time. “I am not seeking reappointment,” he told them. He spoke of completing 40 years in the Tata group and the uncertainty that had accompanied him in the final lap of his journey.

“Spent 40 years in the group and did not know where it will take. I am here,” he said. Careers, he added, end at some point and somebody else will step in. “Tata group will continue to make progress and each one of you will also have opportunities,” he said, urging employees not to pay much attention to gossip and theories surrounding his departure. As he walked out of the coffee house, applause rose in the background.

The decision, however, was not sudden. It was the culmination of six months of unresolved differences between Noel Tata and Chandrasekaran over three key issues — losses in newer businesses, including Tata Digital, Tata Electronics, and Air India; retention of Tata Sons as a private company shedding the tag of upper-layer NBFC; and facilitating the exit of the Shapoorji Pallonji (SP) Group from Tata Sons. Though Chandrasekaran lined up CEOs of Tata Sons’ subsidiaries before the board and detailed the turnaround plans for the new businesses, he chose not to make any commitments to keeping Tata Sons private or convincing the Reserve Bank of India (RBI). There was no progress on the exit of the SP Group, and it continued to demand a listing of Tata Sons.

What next is the question that looms large over the Tata group now. There are many issues before Noel Tata that need a solution. The first is finding a suitable chairman for the $180-billion conglomerate. Second, he will have to decide whether concentration of power is needed at the helm of Tata Sons — if he wants to dilute it, he can split the roles of chairman and CEO. Third, he will have to quell the dissent within the Trusts and Sons and find solutions to regulatory challenges, including the listing of Tata Sons. Finally, he will need to give clarity to executives across Tata group companies on the business focus — whether it is delivering strong returns, expansion or national priorities.

There is optimism on the ground, though. According to Raamdeo Agrawal, chairman, Motilal Oswal Financial Services, these events are common in large corporations and cannot damage the Tata name. “The group stands on a strong value system and sound financial fundamentals. It will continue its journey regardless of who leads it,” he adds.

There are multiple aspects to the events unfolding at Tata, says Ramesh Vaidyanathan, managing partner of law firm BTG Advaya. “Ratan Tata was of the view that the Tata group should invest in critical, long-term projects, and he picked Chandrasekaran to execute in line with that vision. Noel Tata is against burning cash in risky assets, whether it’s electronics, digital or Air India. Cyrus had the same view; he wanted to exit the steel business in the U.K. and was against entering aviation,” says Vaidyanathan. According to him, neither view is inherently right or wrong. A mega-conglomerate such as Tata often requires a delicate balance of both — using the fiscal discipline of one era to fund the ambitious, long-term leaps of the next, he adds.

All eyes on the AGM: Tata Sons, the holding company of around 100 Tata group firms, had adjourned its annual general meeting (AGM), scheduled for August 18, following the non-convening of a mandatory board meeting of Sir Ratan Tata Trust (SRTT), which needs to jointly nominate a representative for the AGM along with Sir Dorabji Tata Trust (SDTT). The two principal trusts, along with allied trusts, hold 66% stake in Tata Sons.

SRTT is in a deadlock because the Maharashtra Charity Commissioner barred it from convening board meetings in May, amid an ongoing inquiry into alleged violations of trustee composition norms under Section 30A(2) of the Maharashtra Public Trusts Act. Complaints, including one filed by Tata Trusts vice chairman Venu Srinivasan himself, alleged that SRTT had exceeded the legal 25% cap on lifetime or perpetual trustees.

Noel Tata and trustees Darius Khambata and Jehangir H.C. Jehangir have written to the commissioner seeking permission to convene the SRTT board meeting. “They have cited three immediate duties of the board that remain pending due to the restriction on meetings — approving accounts, allocating funds for charitable projects, and selecting a nominee for the Tata Sons AGM,” say sources familiar with the matter.

Article 86 of Tata Sons’ Articles of Association (AoA) specifies the quorum requirements for its AGM. A valid quorum will not be met without the presence of an authorised representative jointly nominated by SDTT and SRTT.

The Charity Commissioner is scheduled to hear the SRTT matter on September 8. Tata Trusts boards are scheduled to meet on September 11, while Tata Sons’ board will meet on September 17. Tata Sons has received a three-month extension from the Registrar of Companies to hold its AGM, taking the deadline to December.

The meeting is significant since Chandrasekaran has decided not to pursue an extension. However, he needs reappointment as a director to continue as chairman till February 2027. “The shareholders are expected to respect his decision and give reappointment as director until his role as chairman ends,” says an insider.

The exit of Chandrasekaran opens an opportunity for Noel Tata to set things in order. Differences over the governance structure and the balance between the Trusts and Tata Sons surfaced after Noel Tata took over as chairman of Tata Trusts following Ratan Tata’s demise in October 2024. Trustees who had rarely challenged Ratan Tata’s authority began taking divergent positions. The failure to extend the trusteeship of Mehli Mistry and Pramit Jhaveri, Vijay Singh’s exit from Sir Ratan Tata Trust, and Venu Srinivasan’s complaint concerning the governance of SRTT added to the strain.

Reconstitution of Tata Sons: Another question is — will Noel Tata push to reconstitute the Tata Sons board to retain family control? If the RBI ultimately insists that Tata Sons should go for an IPO, it is the responsibility of Noel Tata to protect the Tata family’s interests in the conglomerate. The issue has gained urgency after the RBI retained Tata Sons on its upper-layer NBFC list for 2026-27, which mandates IPO and listing.

The regulator said the classification is without prejudice to Tata Sons’ pending application to surrender its registration of a core investment company. The RBI has not yet decided on the application. The regulatory uncertainty leaves the possibility of a listing open, if the application is rejected.

The changes Tata would need would have to come from Tata Trusts itself. Noel is not happy with the way Venu Srinivasan — who is also chairman emeritus, TVS Motor Co. — operates. As a trustee, Srinivasan challenges the authority and practices of Tata; besides, he represents the Trusts on the board of Tata Sons along with Noel Tata. Srinivasan holds veto power over decisions of Tata Sons, which can be used against Tata’s proposals. “Removal of ‘dissenting’ Srinivasan from Tata Sons as the nominee of the Trusts would be a major priority of the Tata-camp. But for that, it is necessary to convene the SRTT meeting, which has been blocked by Srinivasan through the petition,” says another insider.

If the central bank asks Tata Sons to get listed, how will the Tata family continue to remain relevant to the group? “Decoupling the roles of chairman and CEO would be a possible option. A statesman kind of personality can become the chairman and the CEO can lead the day-to-day operations,” says another source in the know.

The SRTT needs to convene its board meeting for forming the selection committee, too. Under Article 118 of the Tata Sons’ AoA, the key trusts — SRTT and SDTT — need to nominate three members jointly to the five-member selection committee. One member will be nominated by the Tata Sons board, while another will be an external expert. Though it’s a short time to find a suitable face, the selection committee has time until February 2027, when Chandrasekaran is set to hang up his boots.

Under the current rules, Noel Tata cannot become Tata Sons chairman. In 2022, under Ratan Tata’s guidance, Tata Sons amended its AoA to bar the same individual from simultaneously serving as chairman of Tata Trusts and Tata Sons. This leaves the field open to senior Tata executives as well as external candidates if Noel Tata opts out of the process, as required under the amended rules. “But then, reversing the AoA is not an impossible task,” says a legal expert.

In the race: The question now is who will succeed Chandrasekaran. Sources line up the eligible candidates from inside. The first on the list is turnaround specialist T.V. Narendran, MD and CEO, Tata Steel. He has turned around debt-ridden Tata Steel, shifting its focus back to India. He spearheads the transition of the European steel business towards recycling with electric arc furnaces (EAF). The turnaround of Bhushan Steel, which Tata Steel acquired through the insolvency process in 2018, is another feather in his cap.

Like Narendran, Tata Chemicals MD and CEO Ramakrishnan Mukundan is also an eligible candidate, sources say. Many of his consumer products, such as Tata Salt and Tata Sampann, were demerged from Tata Chemicals to build the new business — Tata Consumer Products. In addition, he joined Tata through Tata Administrative Service in 1990. Shailesh Chandra (MD and CEO of Tata Motors Passenger Vehicles) and Girish Wagh (MD & CEO of the commercial vehicle business, Tata Motors) are the other names doing the rounds. The selection committee will hold no bars and consider even foreign nationals for the post, say insiders.

Another question is what kind of Tata group the next chairman will inherit and what his mandate will be. Chandrasekaran leaves behind a group that has expanded aggressively into aviation, semiconductors, batteries, digital businesses, and other new-age sectors. He reimagined the troubled legacy businesses, including Tata Steel, Tata Power with a renewable focus, and Tata Motors Passenger Vehicles with an EV-first approach. During his tenure, Tata group’s aggregate revenue grew at a CAGR of 10.99% from ₹6.35 lakh crore in FY17 (when Chandrasekaran took over as chairman) to ₹16.24 lakh crore in FY26. PAT climbed 19.66% from ₹33,896 crore to ₹1.71 lakh crore during the period.

However, his origin firm Tata Consultancy Services, which contributes 80% of the dividend for Tata Trusts’ philanthropic activities, is facing challenges in the rapidly-changing tech world. Competition is stiffening in the renewables, EV, and FMCG spaces as well.

The new Tata Sons chief will have to take a call on whether to continue with Chandrasekaran’s broad expansion strategy, recalibrate capital allocation and insist on conservative discipline, or attempt to strike a different balance between long-term bets and near-term returns.

In the meanwhile, veteran market analyst Arun Kejriwal says the resetting process should not affect the morale of company executives. “Chandrasekaran is moving out. There is nobody else to give direction to group firms. Noel Tata should come forward and explain his strategy and give direction to the group. He needs to communicate to the managements about his intentions and expectations,” he adds.

The next chapter at Tata, therefore, will not simply be about replacing a chairman. It will be about resetting the relationship between the Trusts and Tata Sons — and deciding who gets to determine the group’s risk appetite, capital allocation, and strategic direction.