MUMBAI: Tata Sons on Tuesday postponed the decision on granting a third term to chairman N Chandrasekaran after differences surfaced during a board meeting over the performance of certain businesses and the scale of investments made in them, signalling ongoing divergences within the Tata Group. Chandrasekaran’s second term runs until Feb 2027, giving the group time to deliberate on his reappointment.At Tuesday’s board meeting, Noel Tata, chairman of Tata Sons’ principal shareholder Tata Trusts, raised concerns about businesses such as aviation, automobiles and digital services. Air India, acquired by Tata Sons in 2021, lost Rs 10,859 crore in FY25, making it the group’s largest loss-making entity. While some members suggested the chairman’s tenure extension be put to vote, Chandrasekaran “recommended the decision on my extension should be deferred”, he told the media while leaving the group’s HQ, Bombay House. When asked what changes for the group following the development, he said, “Nothing.”The matter of extending Chandrasekaran’s chairmanship was not listed on the main board agenda but was introduced as a supplementary item, said people familiar with the development.At the meeting, Noel Tata listed out criteria on which Chandrasekaran should deliver. These include turning around or reducing losses in aviation and digital services; ensuring heavy capital expenditure in high-risk semiconductors and batteries units does not drain Tata Sons’ cash, as it can no longer raise debt after surrendering its status as a core investment company based on RBI norms; maintaining the company’s current unlisted status given the fact that an IPO would loosen Tata Trusts’ hold over it; and speeding up talks with Shapoorji Pallonji Group to provide them an exit from Tata Sons.Tata Digital, set up five years ago and which bought Bigbasket and 1mg, made the second-highest loss of Rs 4,610 crore in the group, according to Tata Sons’ FY 25 report.

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Tata Trusts chairman Noel Tata and vice chairman Venu Srinivasan represent the philanthropic foundations on the board of Tata Sons. The other Tata Sons members board are independent directors Harish Manwani and Anita George, and company CFO Saurabh Agarwal. On Tuesday, George pointed out that new businesses, especially capital-guzzling ones, take time to mature. Between FY20 and FY25, Tata Sons invested Rs 1 lakh crore in its operating companies, its FY25 report showed.Lawyers said even if the majority supported the extension, the item would not go through as Tata Trusts’ nominees have a veto right. Last July, Tata Trusts passed a resolution for extending Chandrasekaran’s term for another five years. Now six months later, with the issue before the Tata Sons board for further approval, the principal shareholders are clearly taking a relook at the issue.People close to Noel had sounded out some Tata Trusts trustees if he had their backing to defer and rediscuss Chandrasekaran’s extension. They were, however, advised it can be changed only with unanimous approval. “This is the second time that the Tata Sons chairman’s performance has come under scrutiny after Cyrus Mistry,” said an industry observer.People said circumstances have changed since the resolution was passed by Tata Trusts and evolving internal dynamics have shaped the latest development around leadership continuity at the Tata group.The group faced a series of setbacks last year. Air India had a fatal plane crash, while a cyberattack at JLR was severe enough to dent the UK’s GDP. It is also facing headwinds at TCS, its crown jewel, even as rapid adoption of AI-powered services reshapes the tech consulting industry. Over the last one year, the combined market capitalisation of 24 Tata group companies has fallen by a little over Rs 3 lakh crore or 12.5% to Rs 24.6 lakh crore.