Tata may keep its captain amid choppy waters & bold bets

The board of Tata Sons is set to clear a third term for its executive chairman N. Chandrasekaran, with an extraordinary general meeting (EGM) to follow, as per an ET report by Kala Vijayraghavan based on information from sources. The move, if it happens, would come a year before his second five-year term ends, hinting at the group’s desire for continuity at a time of sweeping transformation and mounting technological disruption posed by AI.

The resolution will mark an exception to the retirement policy that typically applies to non-executive roles after the age of 65. Chandrasekaran, who turns 63 in June, would continue in an executive capacity. A similar waiver was granted in 2016 when Ratan Tata stepped back in as chairman following the exit of Cyrus Mistry. Majority shareholder Tata Trusts had already passed a unanimous resolution in October last year backing Chandrasekaran’s reappointment in an executive role.

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The immediate context is both financial and strategic. In FY25, Tata Sons reported a 24% rise in revenue to Rs 5.92 lakh crore, even as net profit declined 17% to Rs 28,898 crore amid a volatile global backdrop. The year began with optimism around macroeconomic stability and easing inflation, but policy uncertainty and dramatic shifts in trade altered the landscape. Against this backdrop, the board is also slated to review updates from Tata Consultancy Services (TCS), Tata Electronics and Air India, all central to the group’s next chapter.

Chandrasekaran, the anchor of big money bets

Chandrasekaran, who joined the Tata Sons board in October 2016 and became chairman in January 2017 after a long career at TCS, was granted his second term in February 2022. Over the past five years, the group has nearly doubled revenue and more than tripled net profit and market capitalisation. It has spent Rs 5.5 lakh crore to make itself “future fit,” as Chandrasekaran wrote in the latest annual report.

The holding company’s capital allocation into new businesses -- spanning semiconductors, electric vehicle batteries, consumer digital platforms and Air India -- is seen as the largest in its history, with commitments exceeding Rs 1.84 lakh crore in recent years. The scale of ambition is without precedent in the conglomerate’s long history as a bellwether of India’s industrial evolution from steel and automobiles to software.

Continuity in executive leadership would therefore not be a procedural matter but a strategic imperative. Several high-stakes projects are being executed simultaneously under him -- the turnaround of Air India, the build-out of Tata Electronics as a semiconductor and precision manufacturing player, and the electric vehicle push led by Tata Motors. The risks are not trivial. Delays, cost overruns or missteps in any of these programmes could affect the group’s credibility and financial resilience. At such a juncture, replacing the captain mid-voyage might introduce uncertainty into already complex transitions.

Chandrasekaran has articulated a clear benchmark. By FY27, all new businesses should rank among the top five group companies by revenue and be profitable. Yet he has also acknowledged that some bets, particularly Air India, which endured a difficult 2025 including the Ahmedabad air crash, may take longer to turn around. The blend of ambition and realism has helped shape investor perception of the group’s reinvention.

The AI shock to India’s IT crown jewel

If capital intensity defines one axis of Tata Group’s transformation, artificial intelligence defines another and perhaps more urgent one. Recent times have seen a sharp sell-off in Indian IT stocks amid concerns that rapid AI-led innovation could upend traditional IT services models. TCS shares have fallen to a five-year low as investors revise expectations.

Global advancements such as Claude Cowork and other AI-driven systems have heightened fears that automation and generative AI could compress billing rates, reduce demand for legacy services and fundamentally alter the economics of outsourcing. Increased oversight of TCS by the Tata Sons board, including a forthcoming presentation on its AI pivot, reflects the seriousness with which the challenge is being treated.

For a chairman who rose through the ranks of TCS, the stakes are personal as well as institutional. The IT services business has long been the group’s profit engine. Any structural disruption there would reverberate across the conglomerate.

Also Read: FIIs turn big bear on IT stocks, pull out another Rs 11,000 crore in 2 weeks

Turning AI from threat to opportunity

Yet Chandrasekaran’s response has not been defensive. Speaking at the AI Impact Summit in New Delhi, he framed AI not as a cyclical headwind but as epochal infrastructure. “AI, in my mind, is the next big infrastructure. It is the infrastructure of intelligence. It will have a very profound impact, exactly the same way in the past other infrastructure changes have done... steam engines, electricity, or the internet,” he said.

Also Read: Tata makes bold AI bets while Dalal Street anxiety grips TCS

In a move that displays both scale and intent, the Tata Group has partnered with OpenAI to establish India’s first large-scale, AI-optimised data centre. The initial 100-megawatt capacity, with plans to scale to one gigawatt, is designed for next-generation AI training and inference. Chandrasekaran described it as a foundational step in building AI infrastructure in the country. Under a multi-year partnership between TCS’ HyperVault unit and OpenAI, several thousand Tata Group employees will gain access to Enterprise ChatGPT to drive productivity and innovation. TCS will also leverage OpenAI’s Codex to enhance software engineering outcomes. Beyond internal use, the collaboration aims to build industry-specific AI solutions for Indian and global enterprises, with TCS deploying and scaling OpenAI’s advanced platforms worldwide.

Chandrasekaran has also outlined ambitions to develop domain-centric, AI-optimised chips, beginning with the automotive sector. This dovetails with Tata Electronics’ semiconductor push and the group’s electric mobility investments, linking AI strategy with manufacturing, automotive and industrial verticals.

Crucially, Chandrasekaran's vision extends beyond corporate competitiveness. “Our mission should be to make AI work for every individual and every citizen in this country,” he said, arguing that AI tools must reach “the last person in the country and in fact on the Earth.” In his mind, AI is both commercial opportunity and societal infrastructure.

Why a third term makes strategic sense

The factors converging around Chandrasekaran’s potential third term will decide the conglomerate's trajectory. The group is in the midst of the largest capital redeployment in its history. It is navigating geopolitical and trade volatility. It is simultaneously attempting to transform a national airline, build semiconductor capacity, accelerate electric mobility and reposition its flagship IT arm for an AI-native world.

Leadership transitions during such periods might carry execution risk. Continuity, particularly in an executive role, allows for accountability over long-gestation bets and coherence across disparate initiatives. It also tells investors and partners that the strategic direction charted since 2017 will not be abruptly altered.

The possible decision by Tata Trusts to back Chandrasekaran’s reappointment suggests that, in the eyes of the group’s custodians, the reinvention underway requires the same hand at the helm. As AI reshapes business models and the conglomerate doubles down on next-generation sectors, retaining the captain may ensure a steady grip on the wheel as the waters grow more unpredictable.