Tata Sons chief N Chandrasekaran to group firms: Embrace AI or risk falling behind

Tata Electronics has emerged as one of the top ten businesses within the group in terms of revenue, while most of the newer ventures are also showing strong momentum in both growth and profitability, Tata Sons chairman N Chandrasekaran said.

Speaking at an offsite event held over the weekend in Dubai, which brought together around 650 top Tata Group executives, Chandrasekaran urged the companies in the $165 billion group to embrace AI and technology swiftly, warning that resistance to technological change could jeopardize the future of their businesses. He emphasised the importance of focusing on domestic growth and cautioned against being distracted or making hasty decisions amid a volatile geopolitical landscape, particularly in light of the reciprocal US tariffs, according to sources.

Tata Sons declined to comment.

Fiscal 2025 that ended March 31 was not a strong year for the group in terms of growth, especially compared to its robust performance in FY24. According to Chandrasekaran, the group is uniquely positioned to capitalise on growth opportunities in the Indian market, where GDP growth remains robust.

Group chief digital officer, Aarthi Subramanian, along with a team from Tata Consultancy Services, presented the significant growth potential that AI could unlock. Tata Trust chairman Noel Tata and his three children, Neville, Leah and Maya who work in group companies, also attended the meet.

Top group companies such as Tata Motors, Tata Consumer, Tata Steel, Trent and newer businesses such as Tata Digital and Tata Electronics among others made presentations on growth plans. After a stellar performance in FY24, the Tata Group has seen a reversal of fortunes in FY25, with both its stock market and operational momentum showing signs of fatigue. The combined market capitalisation of its 25 listed companies declined by 8.4%, or ₹2.6 lakh crore, to ₹27.80 lakh crore, even as the Nifty rose 5.2% in FY25. The group's three most valuable firms-TCS, Titan and Tata Motors-have led the underperformance, slipping 7%, 19%, and 32%, respectively. Fifteen out of the 25 Tata stocks ended in the red during the year.

Losses were particularly sharp in stocks such as Tata Communications, Tata Elxsi, Tata Technologies and Tata Teleservices, which tumbled between 20% and 33%. The selloff has sparked concerns over stretched valuations, limited near-term earnings visibility, and exposure to struggling sectors like global tech, discretionary consumption and autos. The conglomerate's 25 listed firms have collectively added more than ₹9 lakh crores in market capitalisation in FY24, bringing the total to ₹30.45 lakh crore, up 42% compared with the Nifty's gain of 26%.

Despite the market rout, the group's financial performance remained relatively steady. Aggregate sales for the 25 companies rose 4.3% during the nine months ended December 2024 from a year earlier.