Cracks, questions and a changing guard at Tata

Tata is a household name in a way few companies are.

From the salt on the dining table to the car in the driveway, from the tea in the morning to the software running behind some of the world's biggest businesses, the Tata name has become part of everyday life. It has built steel plants and power stations, iconic hotels and an airline. It owns Jaguar Land Rover, makes jewellery and watches, and is now spending billions of rupees to build semiconductors. (Credits: Reuters)

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But some difficult questions are now gathering behind that familiar name.

Air India, brought back into the Tata fold with much fanfare, is still bleeding money and faces a turnaround that could take years. TCS, long the group's most dependable money-spinner, is confronting an artificial intelligence revolution that could change the economics of IT services. Jaguar Land Rover is under pressure after a sharp fall in quarterly profits. And Tata is committing more than Rs 1 lakh crore to semiconductor projects that will take years to prove themselves.

Then, as all this unfolds, comes a change at the top.

N Chandrasekaran, who has led Tata Sons since 2017, will not seek another term when his current tenure ends in February 2027. The transition has turned attention towards Noel Tata, chairman of Tata Trusts, and the relationship between the trusts that control Tata Sons and the professional management running the group.

Whoever succeeds Chandrasekaran will inherit all of it.

AIR INDIA AND THE TURBULENT ROAD TO RECOVERY

Few Tata businesses carry as much history as Air India.

The group's association with aviation goes back to JRD Tata and Tata Airlines. When Tata regained control of Air India in 2022, the return was seen as a homecoming. Rebuilding the airline, however, was an altogether different task.

Tata took over an airline weighed down by decades of state ownership and years of operational and financial problems. Legacy systems had to be replaced, the fleet renewed and the organisation rebuilt. (Credits: Reuters)

Then, in June 2025, came AI171.

The Ahmedabad-London flight crashed shortly after take-off, killing 241 people on board and 19 people on the ground. The investigation remains ongoing, but the disaster placed Air India's safety and operational systems under intense public and regulatory scrutiny in the middle of its transformation.

The scrutiny has continued. In 2026, an Air India flight from Phuket to Delhi suddenly lost around 300 feet in altitude, injuring 24 people and triggering a serious-incident probe.

The investigation, involving the Aircraft Accident Investigation Bureau, came amid further questions after the flight's captain tested positive for marijuana in a confirmatory drug test, though no link between the test result and the altitude loss has been established.

In response, Air India launched a one-time, mandatory drug-testing exercise covering all pilots across Air India and Air India Express, going beyond the existing regulatory requirement for random testing of a portion of flight crew.

All of this has added another layer to Air India's turnaround. Tata is not simply trying to return the airline to profit. It is also modernising its operations and rebuilding confidence while dealing with intense scrutiny over safety and operations. (Credits: Reuters)

And it is proving expensive.

Air India and Air India Express together posted a net loss of Rs 22,238 crore in FY26, more than double the Rs 10,859 crore loss reported a year earlier. Air India's revenue fell to Rs 71,870 crore from Rs 78,636 crore.

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Chandrasekaran has said the turnaround could take even 10 years.

Dr Vishal Dagar, assistant professor of economics at the Great Lakes Institute of Management, Gurgaon, said continuity could matter in such a long and complicated turnaround.

“Leadership certainty typically accelerates turnarounds by keeping priorities stable,” Dagar told India Today Digital, adding that an abrupt transition can bring slower decision-making, diluted accountability and tougher negotiations with stakeholders.

Chandrasekaran's successor will inherit a project already underway, costly to sustain and likely to demand years of management attention.

TCS FACES BIG AI TEST

If Air India is Tata's biggest repair job, TCS is facing a very different problem.

For years, TCS has been the group's great money machine. In FY26, it reported revenue of Rs 2.67 lakh crore and a profit after tax of Rs 49,210 crore.

Now, the business model that helped build that success is coming under pressure from artificial intelligence.

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Indian IT companies grew by putting together huge pools of skilled engineers and doing technology work for clients across the world at scale. More people and more projects meant more revenue. AI is starting to interfere with that equation.

Reuters reported this week that clients are pushing IT companies to deliver more productivity at lower cost, with contracts increasingly shifting towards outcomes rather than the number of hours worked.

TCS is already responding. Chief executive K Krithivasan told Reuters that around 80% of contracts in parts of the company's business-services operations are now based on outcome-performance measures. (Credits: Reuters)

Former Infosys CFO V. Balakrishnan said coding agents and automation were beginning to challenge the industry's traditional pyramid, which relies on large numbers of junior engineers.

The company is hardly being left behind. TCS's revenue grew 2.7% year-on-year in dollar terms in the April-June quarter. Its AI business reached an annualised revenue run rate of $2.6 billion. It reported a total contract value of $9.5 billion for the quarter and won an $800 million AI-led transformation deal with SKF.

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But if AI can do work that previously required large teams of junior programmers and engineers, the economics of outsourcing could change. Clients may need fewer people for some assignments and expect more output for the same money.

That matters enormously to Tata.

TCS has long been one of the group's biggest sources of profit and cash. While Air India absorbs money and Tata pours billions into semiconductor manufacturing, TCS has provided much of the financial muscle that allows the wider group to make such bets.

AI could open up a large new market for TCS. It could also make parts of its old business less lucrative.

JLR AND THE GLOBAL SLOWDOWN

Jaguar Land Rover was once one of the clearest examples of Tata's global ambitions paying off.

When Tata bought the British luxury carmaker from Ford in 2008, the deal was met with scepticism. For years, JLR answered those doubts convincingly. (Credits: Reuters)

Now, the road has become considerably rougher.

For the three months ended June 30, 2026, JLR's after-tax profit fell more than 80% to £66 million. Wholesale volumes dropped by more than 9%, sales in China fell 25%, operating margins narrowed to 2.8%, and the company reported a free cash flow deficit of nearly £1 billion.

Carmakers are grappling with the shift towards electrification, changing consumer demand, intense competition and an increasingly unpredictable global trade environment.

JLR's fortunes are now tied to what happens far beyond India. Demand in China matters. So do trade barriers in the US, regulations in Europe and shifts in consumer behaviour across markets.

Tata's global expansion brought bigger opportunities. It also made the group more exposed to problems it cannot control.

A BIG BET WITH A LONG WAIT

Tata Electronics is building a semiconductor fabrication plant in Dholera, Gujarat, with an investment of up to Rs 91,000 crore and a planned capacity of up to 50,000 wafers a month.

The group is also setting up a semiconductor packaging and testing facility in Assam, with an approved investment of Rs 27,120 crore.

Together, they represent one of Tata's biggest industrial bets. N Chandrasekaran, Chairman, Tata Sons speaks during the foundation stone laying ceremony for India's First AI-enabled Semiconductor Fab manufacturing facilities in Dholera. (Credits: Reuters)

Semiconductor manufacturing demands enormous upfront investment, specialised technology, skilled talent and years of disciplined execution. Returns, if they come, are years away.

That spending comes alongside Air India's turnaround, TCS's adaptation to AI and JLR's problems in global markets.

Bloomberg Opinion columnist Andy Mukherjee pointed to this collision of ownership questions and major spending commitments in a Bloomberg Opinion column published on March 9.

Writing about tensions within Tata Sons and pressure to list the holding company, Mukherjee argued that questions over stewardship were surfacing at a “critical, capital-intensive juncture”.

Dagar added that the uncertainty at the top can eventually affect how a large group approaches its biggest investment decisions.

“Leadership churn can promote a more conservative shift in budgeting, delayed capital expenditure and stricter approval gates,” he said, particularly when companies are considering large, long-horizon investments.

There is no evidence that Tata's investments are about to be reconsidered. But several of the group's biggest commitments are already underway.

THE SUCCESSION QUESTION

Chandrasekaran has been at the centre of many of Tata's biggest decisions since taking over as Tata Sons chairman in 2017.

His tenure has included the return of Air India and the group's expansion in electronics and semiconductors. His decision not to seek another term means Tata now has to prepare for its next phase of leadership. N Chandrashekaran (Credits: Reuters)

This is where Noel Tata becomes central to the story.

As chairman of Tata Trusts, Noel Tata heads the institutions that control 66% of Tata Sons. He does not run Tata Sons day to day, but the trusts' ownership gives them decisive influence over the future of the group and the process of choosing its next chairman. Noel Tata (Credits: Reuters)

Tata's ownership structure separates control from day-to-day management. The trusts sit at the centre as controlling shareholders, while Tata Sons and the executives running individual companies make the business decisions.

The current transition is different from the bitter boardroom battle involving Ratan Tata and Cyrus Mistry. But it has again brought Tata's governance structure under scrutiny.

Dagar said both episodes underline why clarity around power, decision-making, and institutional authority matters.

“When succession becomes an interest of competition, investors and other stakeholders start raising questions over decision rights, transparency and the stability of long-term strategy,” he said.

There is still time before Chandrasekaran's term ends, and there is no certainty that the transition will become contentious. But the next chairman will take over with Air India still deep into its turnaround, semiconductor projects under construction, TCS confronting a changing industry and JLR dealing with an uncertain global market.

TATA SONS IPO DEBATE

There is another question hanging over all this: the future of Tata Sons itself.

Tata Sons sits at the centre of the Tata structure but remains unlisted. Whether that remains the case is not entirely settled.

The Reserve Bank of India (RBI) has continued to classify Tata Sons as an upper-layer NBFC. Tata Sons has sought to surrender its NBFC registration and taken steps, including reducing debt, to avoid a public listing. The RBI has yet to decide on its application.

Meanwhile, the Shapoorji Pallonji Group, Tata Sons' second-largest shareholder, has favoured a listing as a way of unlocking the value of its stake.

Andy Mukherjee's column focused on that tension. A listing could potentially ease some of the pressure around Tata Sons' ownership structure. But it would also bring the company at the centre of the Tata empire under far greater market scrutiny.

Questions about governance, capital allocation, and control would have to withstand the attention of public shareholders.

The RBI's decision is still pending. But the listing question will remain in the background as Tata chooses its next chairman.

TATA BEYOND SUCCESSION

The immediate focus will be on Chandrasekaran's successor. Who will take over? What role will Noel Tata play? Will the next chairman come from within the group or from outside it?

But the appointment will not change the work already underway.

Air India will still need money and management attention. TCS will still be working through what AI does to its industry. JLR will remain exposed to shifts in global demand, trade and technology. The semiconductor projects will still need years of capital and execution.

The succession will decide who takes charge in February 2027. It will not clear the slate.

The investments have been announced, the turnarounds have begun and the pressures on Tata's businesses will not pause while the group decides who should lead it next.

Whoever walks into the chairman's office will find those files waiting.

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