On February 24, 2026, the Tata Sons board deferred a decision on Natarajan Chandrasekaran's reappointment as Chairman for a third five-year term. This was not a routine postponement. Noel Tata, Chairman of Tata Trusts which holds 66% of Tata Sons, sought a detailed roadmap for reviving loss-making businesses before committing to renewal. The deferral signals a profound shift in the group's governance dynamics, moving away from the consensus-driven approach that characterized Ratan Tata's era.
The immediate trigger for this delay is the staggering financial performance of the group's newer ventures. Air India, acquired in January 2022, is projected to post a loss of over ₹21,000 crore in FY26—ten times the budgeted estimate of ₹2,000 crore. Tata Digital, housing BigBasket, 1mg, and Croma, is bleeding cash. BigBasket alone reported losses of ₹2,007 crore in FY25, a 42% surge from the previous year, even as revenue declined. These aren't just numbers on a spreadsheet; they represent a direct challenge to Chandrasekaran's operational leadership and strategic judgment.
The Tata Trusts' 66% stake in Tata Sons is not merely a shareholding percentage—it is the fulcrum of control. Under the Articles of Association, the Trusts have the right to nominate one-third of the company's directors and their affirmative vote is required for major decisions, including capital investments above ₹100 crore and the appointment or removal of the chairman. This gives Noel Tata substantial formal leverage, but his current position is complicated by internal divisions within the Trusts themselves.
The timeline shift is equally telling. Ratan Tata typically discussed reappointment one month before term end. In July 2025, however, the Trusts passed a resolution backing Chandrasekaran for a third term nearly 18 months before his current term ends in February 2027. This early resolution was driven by multiple simultaneous crises: the listing debate, Chandrasekaran's tenure, and escalating tensions with the Shapoorji Pallonji (SP) Group. The early discussion was an attempt to provide clarity, but the deteriorating performance of Air India and Tata Digital has rendered that earlier resolution effectively obsolete, forcing Noel Tata to demand fresh answers.
Chandrasekaran's reluctance to outline a formal five-year strategic roadmap is a source of significant friction. Instead, he has presented a three-year loss reduction strategy, emphasizing that full profitability in new ventures will take time. This ambiguity creates substantial risks for group-level capital allocation. The group has already invested over $11 billion in Air India, Tata Electronics, and Tata Digital. With cumulative losses from new ventures projected to reach ₹29,000 crore in FY26, the board is rightly questioning whether this capital is being deployed efficiently.
The trade-off between Chandrasekaran's operating business focus and Noel Tata's demand for group-level strategic direction is stark. Chandrasekaran has given the platform to CEOs like Campbell Wilson of Air India and Randhir Thakur of Tata Electronics to present their unit-specific plans. This operational granularity is valuable, but it lacks the consolidated strategic framework that Noel Tata is seeking. The board needs to know not just how each business plans to perform, but how these businesses fit together, what the group's overall risk appetite is, and where the boundaries of capital commitment lie. Without this, capital allocation becomes a series of disconnected bets rather than a coherent strategy.
The Shapoorji Pallonji Group's 18.37% stake in Tata Sons is a structural fault line in the group's governance. Valued at approximately ₹3 lakh crore, this stake is completely illiquid due to transfer restrictions in Tata Sons' Articles of Association. The SP Group, burdened with an estimated ₹55,000–60,000 crore in total debt, is desperate for liquidity. They have advocated strongly for a Tata Sons IPO, which would provide them a market-driven exit. Noel Tata and the Trusts have opposed listing, fearing it would dilute their control and subject the group to short-term market pressures.
This deadlock is being forced to a head by the Reserve Bank of India. In September 2022, the RBI classified Tata Sons as an upper-layer NBFC, mandating a listing within three years—by September 30, 2025. Tata Sons missed that deadline. It has applied to surrender its NBFC registration, arguing it has repaid debt and repositioned itself as a pure holding company. However, the RBI's evolving regulatory framework, particularly a draft proposal in April 2026 that would classify any NBFC with assets over ₹1 lakh crore as upper-layer, threatens to close this escape route. With Tata Sons reporting standalone assets of ₹1.75 lakh crore, it would remain in the upper layer regardless of its deregistration application.
The absence of RBI clarity prevents any resolution of the SP Group exit framework. If the RBI forces a listing, Tata Trusts' ownership could be diluted significantly.
This dilution threatens to fundamentally alter the group's governance model, potentially weakening the Trusts' ability to support distressed group companies—a role they have played historically, as seen when Ratan Tata prevailed on the board to honour obligations to Docomo.
The causal relationship between operating unit performance and board confidence in Chandrasekaran's leadership is direct and unforgiving. The specific loss metrics are damning. Air India's FY26 losses are projected at ₹20,000–27,000 crore, driven by a "perfect storm" of external shocks including Pakistan's airspace closure, elevated fuel prices, and the tragic AI171 crash. While external factors are significant, the 10x variance between budget and actual losses points to failures in risk management and financial resilience planning.
BigBasket's decline is equally concerning. Once a pioneer in online grocery, it has lost ground to quick commerce rivals like Blinkit, which holds over 40% market share. BigBasket's losses widened despite a 51% surge in marketing spend, suggesting deep-seated execution issues. Tata Digital has seen three CEO changes in its short history, indicating governance instability. These operational underperformances have triggered Noel Tata's demand for course correction and strategic clarity before he will support Chandrasekaran's reappointment.
The financial presentations by CEOs to the Tata Sons board have become a critical accountability mechanism. In a marathon six-hour meeting on May 26, 2026, CEOs of Air India, Tata Electronics, and Tata Digital presented their capital expenditure and loss-funding requirements. A financial overview slide failed to convince Noel Tata that the targets were achievable. This assessment is not just about the numbers; it is about the board's confidence in Chandrasekaran's ability to oversee a complex turnaround.
The capital requirements of these loss-making subsidiaries are creating severe constraints on Tata Sons' financial health. The group's unlisted ventures posted losses of ₹10,905 crore in FY25, expected to rise to ₹29,000 crore in FY26. This comes at a time when dividend income from listed subsidiaries is declining. Thirteen major Tata Group companies contributed ₹32,615 crore in dividends in FY26, down 10.3% from the previous year.
This capital crunch has direct implications for the SP Group exit. Tata Sons is caught in a dilemma: it needs to fund massive growth initiatives in semiconductors, electric vehicles, and aviation, while also potentially needing to mobilize ₹3 lakh crore or more to buy out the SP Group if a negotiated exit is pursued.
The June 2026 Tata Sons board meeting has become the focal point for these interconnected crises. The board is expected to discuss the immediate funding requirements of Air India and other ventures, reconsider Chandrasekaran's reappointment, and take a position on the listing question. How these questions are resolved will determine not just who steers the ship, but the very structure of the Tata Group for decades to come. The governance premium that Tata stocks have historically commanded is not unconditional—it depends on the group's ability to make clear-eyed decisions and emerge with coherent leadership. The moment to demonstrate that capacity is now.
