Chandra's exit revives questions over Tata's governance structure

Tata Sons is heading into a leadership change, and governance experts say the group's next chairman will need a very different skill set than the one that got N Chandrasekaran the job in the first place.

Nirmalya Kumar, who served on the Tata Sons Group Executive Council under Cyrus Mistry and is now a visiting professor of strategy at ISB, argued the roots of the current situation go back a decade, to how Ratan Tata removed Mistry as chairman.

“Whatever we may say about governance at Tata Group, it has been shown that governance at Tata Group is a one-person job, not a broader responsibility that is shared with the board,” Kumar said.

In his letter to Tata Sons board, Chandra said Tata Trusts — the charitable trusts that together hold a majority stake in Tata Sons — had unanimously recommended him for a third term. However, one board member did not support the proposal and, in the absence of unanimous backing, he chose to defer the decision.

The development has revived questions about whether Tata Sons has a structural governance concern and who should lead India's biggest conglomerate next.

Rajesh Dahiya, MD & CEO of Good Governance, took a more measured view of the moment. “This was a bad marriage in Bombay House. It was going on for one year, so one way or other way, clarity is always good for everyone," he said, referring to Tata Group's Mumbai headquarters.

Dahiya noted one key difference from the last leadership change: Noel Tata, chairman of Tata Trusts, is not himself in contention this time. "We have a benefit that there is a elderly mentor who can oversee the process without being an interested party," he said.

Why the usual candidates may not be enough

The discussion referred to Tata Group executives TV Narendran, R Mukundan and Ajoy Chawla as potential candidates. Dahiya said "some of these people have built businesses from scratch to global businesses" and have "the wherewithal to lead businesses which are diverse."

He added that Tata Sons isn't limited to internal picks either: "Tatas can attract the best from the market. They don't really have to go inside the group."

Kumar, however, said. "None of them have the capability to become a chairman of Tata Sons," arguing that the job isn't to run an existing business model well — which is what Chandra and the internal candidates have done — but to decide "what should this portfolio of diverse businesses we have look like in the future," including how capital gets allocated across very different industries.

Asked who he would personally pick, Kumar said that in an unconstrained world, he would appoint Noel Tata as chairman of Tata Sons. Dahiya's view was that the eventual answer likely needs to combine group knowledge with fresh thinking:

"We need to build institute which should come from knowing the group as it is... but at the same time, we also need a leader who can be younger, who can look at newer businesses."

A weakened structure

Both panelists pointed to a structural problem beyond any single name. Dahiya argued that the group had a stronger Group Executive Council carried during Ratan Tata's tenure, with figures such as Kishor Chaukar, R Gopalakrishnan and RK Krishna Kumar running businesses independently as chairpersons. This structure was diluted during Chandra's tenure. "This is an opportunity for the group not only to find a chairperson, but also a structure which can deal with the larger complexity," Dahiya said.

Kumar also raised the historical split between the Tata Trusts chairmanship and the Tata Sons chairmanship, which were once held by the same person. "That's how the entire governance system was aligned with each other, so that the Trusts and the Sons both knew what each other were doing," he said, adding that Tata Trusts retains the power to remove the Tata Sons chairman at will.

The losses the next chairman inherits

The experts warned about the state of Tata’s newer businesses. Kumar pointed to continued losses at Air India, Tata Electronics, and Tata Digital as challenges for the incoming chairman.

He credited Chandra with executing the Cyrus Mistry 2025 strategy document, but said the newer ventures — artificial intelligence, Tata Digital and Tata Electronics — call for "an exploration of new business models" rather than the execution skills that built Chandra's reputation. Tata Consultancy Services (TCS) — the group's main profit engine — is itself "facing severe disruption threat" from AI, he added. This means the incoming chairman has to fix the loss-makers and defend the cash cow at the same time.

What happens next

Dahiya said the next six months will be decisive, and will test decision-making at both the Tata Sons and Tata Trusts boards. "The challenge we have is Tata Sons and Tata Trust Board — sometimes we are not able to see the tension open in the market. That should be resolved," he said.

A separate question hanging over the group is whether Tata Sons should go public. The Reserve Bank of India has classified Tata Sons as an "upper-layer" non-banking financial company (NBFC), a category that typically comes with tighter regulatory scrutiny, though the RBI has not said whether it will insist on a listing. Noel Tata has previously said he prefers to keep Tata Sons private. Kumar disagreed: "In the end, Tata Sons should be listed... it makes you more performance-oriented."

For the entire discussion, watch the accompanying video



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