Tata Sons Chairman N. Chandrasekaran is seen at the Tata Group headquarters in Mumbai, India, on August 13, 2026, a day after announcing his resignation.
Null Photo | Null Photo | Getty Images
The future of India’s first semiconductor factory and India’s ambitions to replace China as a major supplier of semiconductors apple Uncertainty comes amid mounting uncertainty after Tata Sons Chairman N. Chandrasekaran said he would not seek another term.
The Tata Group has made some of its “largest capital commitments” under Chandrasekaran’s leadership, which he said in his latest letter to shareholders are fundamental to India’s path to becoming a developed country by 2047.
Tata Sons, the holding company of the Tata Group, also reportedly bought struggling national carrier Air India in 2022 and started producing iPhones after acquiring Wistron and Pegatron, overtaking Taiwanese company Foxconn’s Indian arm to become the country’s biggest Apple supplier.
In 2024, the company announced plans to partner with Taiwan’s Powerchip Semiconductor Manufacturing to set up India’s first semiconductor factory worth $11 billion.
All of these efforts by the steel conglomerate, which also owns luxury carmaker JLR, are early in the investment cycle and are not generating profits.
The decision of the group’s largest money spinning company to take a bold bet at the risk of loss Tata Consultancy Servicestackling the impact of artificial intelligence on the information technology sector has led to a rift between Tata Sons and its major shareholder Tata Trusts, experts said.
Tension in the boardroom
The current “fight” between Tata Trusts and Tata Sons stems from the allocation of capital to loss-making businesses, Ruchir Khare, chief investment officer at portfolio management firm Two X Capital, told CNBC, adding that the chairman’s impending departure calls into question the group’s commitment to making large-scale, long-term investments.
Mr. Chandrasekaran is seen as a “professional successor” to the late Ratan Tata, who appointed him, Mr. Khare said, adding that the lack of continuity suggests a disagreement between the two power centers over the future direction of Tata Sons.
The process to find a replacement for the 63-year-old formally began on Thursday, a day after Mr Chandrasekaran declined to be re-elected as chairman, expressing frustration with delays in reappointing him for another five years.
Sir Dorabji Tata Trusts, which is part of the major trusts that own 66% of Tata Sons, said in a statement that it “respects Mr. Chandrasekaran’s decision not to stand for re-election” and “provides our full support to Tata Sons to ensure a smooth, timely and orderly leadership transition.”
In his resignation letter on Wednesday, Chandrasekaran said the proposal to extend his term had been pending for six months but “was not implemented because one of the board members did not support it.” According to local media reports, he had disagreements with Tata Trusts chairman Noel Tata over declining profitability and the allocation of capital to loss-making businesses.
Tata Sons’ consolidated net profit for the fiscal year ended March 2026 fell 35% to 266 billion rupees (about $2.78 billion) as losses at Air India, Tata Digital and Tata Electronics piled up, according to the company’s latest annual report.
All of these loss-making businesses are unlisted, but the market capitalization of listed companies in the Tata group fell 12% in the same period as the share price of IT services company TCS was revised due to concerns about its long-term growth prospects.
Tata Sons did not respond to CNBC’s request for comment, while Tata Trusts did not respond to questions about capital allocation concerns.
Anil K. Sood, co-founder and professor at the Mumbai-based Institute for Advanced Studies in Multi-Choices, said Tata Trusts, which relies on the income generated by Tata Sons, wants to be conservative in its capital allocation at a time when its main cash-generating IT services business is under pressure.
dual power center
For example, he said the acquisition of Air India not only drains capital but is also “damaging” Tata’s brand due to frequent operational problems. Meanwhile, AI is disrupting cash-rich, high-margin IT services businesses and investing in “commoditized” businesses, Sood said.
Experts say that Tata Trusts, which plays the role of kingmaker in determining control of Tata Sons, has an advantage in this power struggle.
This dual power center led to the unceremonious resignation of another Tata Sons chairman, Cyrus Mistry, a decade ago. Mr Mistry was ousted from his post in 2016 following a public spat with Ratan Tata, who was heading Tata Trusts at the time.
“We look at the current situation with a lot of cynicism,” Ramesh Vaidyanathan, managing director at BTG Advaya, an Indian law firm specializing in corporate disputes and transaction law, told CNBC.
Mr. Mistry was focused on “maximizing return on equity” and “clinical” disinvestment, while Mr. Ratan Tata wanted the company to take bolder bets, Mr. Vaidyanathan said, adding that the current board battle had turned the tables.
While the Tata Group has long lived with the dichotomy between these two power centers, experts said the current dispute between Tata Trusts and Tata Sons is particularly pressing as it comes at a time when the company is in the midst of a serious investment cycle.
It added that Mr Chandrasekaran’s successor will have the enviable role of managing Tata Trusts’ desired course correction while also conveying the message to the market that the group is ready to face the next wave of global challenges.
Tata Sons will convene its annual general meeting on August 18, and the board is likely to discuss a successor as Chandrasekaran’s term ends in February next year.
