The decision of N Chandrasekaran not to offer himself for reappointment when his current term expires in February 2027 has dominated all recent business news. While Chandra himself has not spoken publicly about his decision, his letter was widely circulated. Nor have the Tata Trusts or their chairman, Noel Tata, spoken about it. The only response was a statement that the Sir Dorab Tata Trust has suggested that steps be taken to find a successor.
It is unfortunate that this important issue has been played out in the media ever since Chandra’s reappointment for a third term was deferred by the Tata Sons board in February.
Both Noel Tata and Chandra are very balanced, low-key individuals who have shied away from publicity, and have little interest in projecting themselves. It is therefore surprising that between them they did not work out a common plan and issue a joint statement of their intentions or ideas over the last several months, or at the final stage.
It is not public, and no Tata Sons directors are speaking in public, as to what discussions took place between Noel and Chandra. Reportedly, Noel offered Chandra a two-year extension, at which time he would have reached the Tata retirement age of 65 – as opposed to a full five-year term that the Trusts had resolved in earlier meetings. Nor has either side made a statement as to why such an offer was spurned. However, all agree that, in Chandra’s words: “Tata Sons is a very large institution and there are many strategic projects that are in critical stages of execution. It is not only necessary to have a leader in place to lead the Group beyond February 2027, but also clarity in leadership is important for employees, investors, partners and other stakeholders.”
But what has emerged publicly is that the Trustees were concerned about the large losses which had to be brought under control. It would also be fair to say Chandra, who had been focussing on financial discipline and capital allocation, must have been equally concerned.
However, the biggest loss-maker is Air India, accounting for two-thirds of all losses. The decision to acquire Air India was clearly Ratan Tata’s decision. And at the time, all applauded the decision. All were happy when Air India placed very large orders for new planes and retrofits of the current fleet, in its bold moves to bring Air India back to its glory days. But the airline business requires patient capital and globally margins are thin. In the last 12-18 months, things went beyond anyone’s control and started to go wrong – Pakistan’s closure of its airspace, the rocketing price of oil after the Iran war, and the slide of the rupee to past 95 to the dollar: the losses ballooned. But the reality is that Air India has a great future and will, in due course, be one of the jewels in the group. There are losses in semiconductors and the digital businesses. But these are discussions for another day.
And as far as the public listing of Tata Sons is concerned, it is difficult to believe that Chandra and Noel are on different sides. Chandra was part of the whole move to take Tata Sons private. This decision lies in the hands of the RBI and ultimately the Supreme Court.
It is sad that Chandra fell victim to the manoeuvrings initiated by some of the erstwhile Trustees. But the Tata Trusts and Tata Sons are stable institutions. There is little doubt that both will sail through the current turbulence with calm and dignity.