[Tata Group Chairman N Chandrasekaran Steps Down in February]

N Chandrasekaran, the 63-year-old chairman of Tata Group, has announced that he will not seek reappointment when his term ends in February. The decision comes after the board of Tata Sons failed to reach a resolution on a five-year extension of his term, months after the proposal first came up.

The news sent shares of listed Tata companies plummeting and has raised questions over what lies ahead for the giant conglomerate that owns Air India, Tata Steel, and Jaguar Land Rover. Chandrasekaran's resignation, which comes days ahead of Tata Sons' annual general meeting, points to tensions that have been playing out for months after a boardroom power battle erupted between trustees.

The Tata Group is uniquely structured - a charitable arm called Tata Trusts owns 66% of the group's parent company, Tata Sons. This has given the group tax and regulatory advantages, as well as the ability to carry out charitable activities. However, experts say that its dual non-profit and commercial objectives have sometimes led to governance issues.

Tata Trusts has three nominees on the Tata Sons board, which has been plagued by disagreements over issues such as board nominations, funding approvals, and the public listing of Tata Sons. The group has not publicly commented on the discord.

The internal rifts threatened to distract the group while it was facing severe business headwinds, including the revival of Air India, which it bought from the Indian government in 2022. When the proposal for his extension was brought before the board in February, one board member did not support it, Chandrasekaran said in his statement without naming the person.

"In the absence of unanimous support, I chose to defer the decision," he said, adding that there was no resolution even six months later. "Tata Sons is a very large institution and there are many strategic projects that are under critical stages of execution. It is not only necessary to have a leader in place to lead the Group beyond Feb 2027, but also clarity on leadership is important for employees, investors, partners, and other stakeholders," he said.