From IPO to Air India: The big challenges facing Tata Sons after Chandrasekaran exit

N Chandrasekaran will step down as Tata Sons chairman when his term ends in February 2027. The move leaves Noel Tata weighing succession, IPO plans and the group's capital-heavy bets.Successor to face unresolved IPO and regulatory challenges. N Chandrasekaran is set to leave the Tata Sons chairman's office in February 2027, but the biggest questions facing the Tata Group will remain firmly on the table.Chandrasekaran has decided not to offer himself for reappointment when his current tenure ends on February 20, 2027. The decision brings the curtains down on nearly a decade of his leadership of Tata Sons, but it also comes at a crucial point for the group's holding company.The first task is already underway. The Sir Dorabji Tata Trust has decided to initiate the setting up of a Selection Committee to recommend a new chairman of the Tata Sons board. Tata Trusts has also said it will support Tata Sons in ensuring a smooth and orderly leadership transition.But whoever takes over will inherit several unresolved issues, from the future of the Tata Sons IPO and its regulatory status to the group's massive investments in semiconductors, batteries and aviation. FINDING THE NEXT CHAIRMANThe immediate challenge for Tata Sons is to find a successor to Chandrasekaran.His tenure saw the Tata Group make some of its biggest bets in years, including its return to semiconductors, expansion in electronics and the acquisition and rebuilding of Air India. The next chairman will therefore inherit a group that is significantly different from the one Chandrasekaran took charge of in 2017.The question for Tata Sons is not simply who can replace Chandrasekaran, but what kind of leadership the group needs for its next phase.One view among analysts is that the next chairman could bring greater focus on capital discipline and extracting returns from businesses after years of expansion.THE TATA SONS IPO QUESTIONThe biggest structural question hanging over Tata Sons is its potential listing.Tata Sons has been classified by the RBI as a core investment company and remains in the NBFC upper layer. RBI retained Tata Sons in the upper-layer list for FY27 on August 6, although its inclusion was stated to be without prejudice to its application for deregistration, which remains under examination.If Tata Sons can demonstrate that its future activities fall outside the NBFC regulatory framework, it could potentially continue as a holding company without being subject to the mandatory listing requirement.But the listing question has divided stakeholders.Noel Tata, chairman of Tata Trusts, has opposed a listing because of concerns over its impact on the group's long-term character, control and philanthropic objectives. A public Tata Sons would also bring outside shareholders and greater market scrutiny to the apex of the group.For the Shapoorji Pallonji Group, which owns around 18.4% of Tata Sons, the calculation is different. A listing could provide a way to unlock value from its stake and create a transparent market valuation and greater liquidity.That makes the Tata Sons IPO much more than a regulatory question. It goes to the heart of how the Tata Group wants its holding company to function.AIR INDIA REMAINS A MAJOR TESTAir India could prove to be one of the toughest tests for Tata Sons' next phase. The Tata Group took control of the airline in 2022 with the ambition of rebuilding a national carrier into a globally competitive airline, but the turnaround has been hit by financial, operational and regulatory challenges.The biggest setback came with the Air India AI171 crash in June 2025, which killed 260 people. The accident brought intense scrutiny of the airline's safety and operating practices and has made restoring confidence a central challenge for the group. Air India's financial performance has also remained under pressure. The combined Air India group reported a net loss of Rs 22,238 crore in FY26, more than double the Rs 10,859-crore loss reported in FY25, while revenue fell nearly 9% to Rs 71,870 crore.The airline has also faced regulatory hurdles. DGCA inspections identified multiple lapses, including seven classified as Level I significant breaches, according to the harder document-based figure cited in the research material. Regulators have also flagged instances of an aircraft being operated multiple times without a valid airworthiness certificate and flights where emergency equipment checks had not been carried out.And the safety questions have not disappeared. On August 4, an Air India Phuket-Delhi flight, AI2379, experienced a sudden altitude variation of around 300 feet during turbulence, leaving 20 passengers and four cabin crew members injured. A subsequent post-flight maintenance report recorded 11 system alerts within two to three minutes, including three hydraulic low-pressure warnings involving the aircraft's green, yellow and blue hydraulic systems. An autopilot disconnection was recorded shortly after those warnings, while another autopilot-off entry appeared before landing.The incident is now being investigated by the Aircraft Accident Investigation Bureau (AAIB), with the post-flight maintenance report handed over to the DGCA and AAIB. The investigation is examining flight data, aircraft systems, operational and maintenance records, medical information and other evidence before drawing conclusions.This comes as Air India has also got a new CEO, Tewolde Gebremariam, who took charge after a global search for a leader with experience in large-scale airline transformation, safety management and profitable expansion.For Tata Sons, therefore, Air India is no longer simply a turnaround story. It is a test of whether the group can simultaneously improve safety, regulatory compliance, operational reliability and financial performance while continuing to build the airline into the international carrier it envisaged when it took control.That makes the next phase particularly important for Tata Sons. The group has already committed substantial capital to aviation, but the challenge now is to ensure that further investment translates into a safer, more reliable and eventually profitable Air India.BIG BETS, BIGGER CAPITAL NEEDSThe Tata Group has also spent heavily on businesses that are expected to shape its future.Semiconductors are perhaps the clearest example.Tata is attempting to build an indigenous chip manufacturing ecosystem, including Tata Electronics' semiconductor facility in Assam. But the business involves enormous upfront investment and requires technology, scale and execution.The group is also building a battery business through Agratas. But the company has been reassessing its plans amid cost pressures and difficulties in securing technology partnerships.Tata Digital is another business that has required substantial investment while still needing to demonstrate a clearer path towards profitability.This leaves Tata Sons with a difficult capital-allocation question: how much more should it invest in these businesses, and how long should it wait for them to deliver returns?Reuters Breakingviews had argued that Tata Sons' large investment programme and its long-term bets were one reason the question of a public listing was particularly consequential. A listed holding company could face greater pressure to meet shorter-term market expectations, potentially changing the way such long-term projects are pursued.THE CAPITAL ALLOCATION TESTThis may ultimately be the biggest challenge for Tata Sons.Under Chandrasekaran, the group pursued a strategy of rebuilding businesses and entering new industries. The Tata Group returned to aviation, made a major push into electronics and semiconductors, and expanded its presence in batteries and digital businesses.The next phase may require a different balance.Tata Sons' board has been looking more closely at capital-intensive businesses and seeking clearer evidence of potential returns before approving additional spending, according to the material reviewed for this story.That does not necessarily mean the Tata Group is abandoning its long-term bets.Rather, the challenge is to decide which businesses need more capital, which need more time and which need to show better financial performance.A NEW PHASE FOR TATA SONSChandrasekaran's departure therefore comes at an important moment.Tata Sons has to find a new chairman, deal with the unresolved IPO and regulatory question, manage the Air India turnaround and decide how aggressively it should continue investing in businesses that could define the group's future.At the same time, it has to preserve the long-term approach that has traditionally been associated with the Tata Group while ensuring that its growing investments eventually translate into sustainable returns.The selection process has now formally begun, with the Sir Dorabji Tata Trust moving to establish a committee to recommend the next Tata Sons chairman.The immediate task is to find the person.The harder task will be deciding what Tata Sons wants that person to do next.- EndsPublished On: Aug 13, 2026 15:18 IST