Messy succession at Tata group for the third straight time

For all its widely acclaimed and often well-deserved record of corporate governance, succession at the topmost echelon of the Tata group has been a messy affair for the third consecutive time.

The mind goes back to March 1991, when JRD Tata resigned and named Ratan Tata as his successor and chairman of Tata Sons, the holding company. It wasn’t smooth for the 53-year-old Ratan. JRD had run the group as a loose conglomerate, giving full freedom to the various managing directors of the group companies. At least two were a force to reckon with: Rusi Mody, the chairman and managing director of Tata Steel (then TISCO), and Darbari Seth, the technocrat who had almost single-handedly created Tata Chemicals. Such was their clout that Rusi Mody is said to have almost openly mocked Ratan Tata’s appointment.

Ratan Tata retaliated by introducing a retirement-age policy for executive and non-executive directors, which was directly seen as a hint to Mody and Seth. In late 1991, Mody tried to promote his protégés Aditya Kashyap and Ishaat Hussain without a nod from Tata Sons, and Ratan Tata used the TISCO board to reverse the promotions. Eventually, after a series of public battles, Mody was first stripped of his MD position and eventually sacked as chairman too. Likewise, Darbari Seth was eased out under the retirement-age rule, thwarting his effort to make his son his successor at Tata Chemicals. Eventually, Ajit Kerkar, the head of Indian Hotels, was also unceremoniously sacked for financial and other irregularities.

Ratan Tata had the advantage of JRD living for over two years after retiring as Tata Sons chief and silently backing Ratan’s actions. Even then, the succession was rough.

Ratan Tata’s own retirement and the handing over of the baton to Cyrus Mistry in 2016 at first seemed better handled than the transition from JRD to Ratan Tata, but the honeymoon was short-lived. The disagreement between Cyrus Mistry and Ratan Tata seemed to be one of profit and numbers versus the Tata legacy and values. Cyrus Mistry is believed to have wanted to cut down on loss-making units in the group, such as the Nano car, the Corus steel units and some units of Indian Hotels. Matters worsened when he decided to fight Japanese telecom company Docomo in international arbitration over a $1.17 billion exit payment from Tata’s cellphone business rather than settle. Ratan Tata is believed to have argued that this tarnished the group’s global image. Finally, Cyrus Mistry was unceremoniously voted out as chairman of Tata Sons and Ratan Tata reinstated as interim chairman at what was called as a regular board meeting in October 2016.

Ratan Tata and the Tata Trusts replaced Cyrus Mistry with N Chandrasekaran as Tata Sons chairman, and the run was smooth for the first nine years of Chandra’s tenure. But clashes started after Noel Tata took over as chairman of the Tata Trusts following the death of his half-brother Ratan Tata in October 2024. Reminiscent of the way Ratan Tata asserted power over powerful Tata group companies, this time Noel Tata moved to neutralise powerful board members of the Tata Trusts to acquire more control. Mehli Mistry, a close confidant of Ratan Tata, was forcibly removed from the Trusts, while Pramit Jhaveri chose not to seek reappointment. Both were seen by Noel Tata as part of a faction opposing him.

Even though the Tata Trusts had approved a further five-year term for Chandrasekaran from 2027 to 2032, Noel Tata, at a February 2026 board meeting of Tata Sons, opposed the extension, raising questions over the financial performance and slow monetisation of digital units such as Tata Neu and BigBasket, which had absorbed heavy funding. He also raised questions over the heavy capital expenditure and long-gestation investments in the semiconductor business. With Tata Sons failing to vet his reappointment, six months after the Trusts had voted for his third term, Chandrasekaran announced his resignation today.

There is something about the Tatas: for all their celebrated corporate governance, they just can’t seem to manage a smooth succession.