Noel Tata is asking the right questions of Tata Sons boss; but there are some questions he himself must answer

The Tata Sons board decided on Tuesday (24 February 2026) to defer a decision on giving its executive chairman N Chandrasekaran an extension. The move was precipitated by Noel Tata, Chairman of the Tata Trusts which own a majority of shares in Tata Sons. He asked Chandrasekaran some tough questions on losses in several parts of the conglomerate.

Among other things, Noel Tata wanted Chandrasekaran’s extension to depend on the latter giving the board assurances on how he plans to tackle a few key challenges. Among these: stemming losses at Air India and Tata Digital: protecting cash at Tata Sons by monitoring spends in the semiconductor and batteries businesses; maintaining Tata Sons’ unlisted status (the RBI wants it to list, given its size); and finding a way to give the Shapoorji Pallonji (SP) group an exit from Tata Sons. The SP group owns 18.37 percent is Tata Sons, and is the single biggest shareholder after the Tata Trusts. The group also wants to use funds currently locked up in illiquid Tata Sons shares to build its own businesses.

To give us a flavour of the kinds of losses being made by some of the big companies in the Tata group, here are some examples.  Air India is facing losses of Rs 15,000 crore in fiscal 2025-26, thanks in part to the crash in Ahmedabad of an Air India international flight last year. Tata Digital (which runs ecommerce companies like Big Basket) has accumulated losses of nearly Rs 17,000 crore, and has been given board approval to spend Rs 4,000 crore more. Tata Motors, thanks to a cyber attack on Jaguar Land Rover (JLR) last year, has reported massive losses of Rs 3,486 crore in the last quarter (October-December 2025). To make matters worse, Tata Consultancy Services (TCS), whose dividends power Tata Sons’ cash flows, lost 30 percent of its market value over the last one year, thanks to fears of artificial intelligence (AI) denting its labour-arbitrage-based revenue model and weak business growth in north America.

So, yes, Noel Tata is asking the right questions. The primary task of a conglomerate is about allocating capital between its various businesses based on anticipated investment horizons and return on net worth, but this question has often not been addressed adequately in the Tata group, which has 31 major companies, of which 26 are listed, and collectively had a turnover of over $180 billion in 2024-25 (Rs 16.2 lakh crore).

The problem is not that all the losses and business challenges are due to Chandrasekaran’s decisions alone. For example, the purchase of Air India (from the government) and JLR (from Ford) was the result of Noel’s predecessor, the late Ratan Tata’s love for cars and aviation. Neither was a fully business-led decision, but it became Chandrasekaran’s lot to fulfil Ratan Tata’s wishes and run the companies (through their own boards, of course) as well as possible. Neither the JLR cyber attack nor the Air India crashes could have been foreseen. As for the huge losses in Tata Digital, it is nobody’s case that anyone is going to succeed quickly. These businesses need large amounts of capital over long periods of time. Competitors Swiggy and Eternal (owner of Zomato and Blinkit quick commerce firms) continue to underperform, with Swiggy reporting losses of Rs 1,065 crore in the October-December 2025 quarter. While Blinkit reported a marginal operating profit in the same quarter, stock mavens are not sure it has fully turned around.

The larger issue is not whether the Tata Sons chairman has performed or not, but whether Tata as a conglomerate has a clear policy on how it is going to allocate capital between various business, some profitable, others requiring patient capital.

Noel Tata, as a representative of the Tata Trusts, also needs to ask himself a few questions.

One, he does not want Tata Sons to be listed, but this implies that it cannot borrow using its high credit ratings. The Reserve Bank will insist that it lists and subjects itself to close monitoring. In 2022, the RBI classified Tata Sons as an upper layer non-bank finance company, which would have required it to list in three years. But Tata Sons repaid most of its debts amounting to over Rs 20,000 crore and offered to deregister its NBFC status in order to remain a closely-held company of the Tata group. The question Tata needs to answer is simple: if he wants to remain unlisted, will dividends from Tata group companies be adequate for the promoter company to retain its holdings in major companies? Or invest in long-gestation loss-makers.

Two, if Noel Tata wants the Shapoorji Pallonji group out of Tata Sons, there are only two ways of doing this: one is to list, so that the latter can exit via the stock markets. But if this is out, either Tata Sons will have to buy them out by paying them cash, or get an external buyer to buy the SP Group out, which again leaves Tata Sons with another investor who may need to exit at some point.

Three, Tata Consultancy Services is Tata Sons’ primary cash cow. In 2024-25, the last full year for which we have details, 90 percent of Tata Sons’ dividend income of over Rs 36,000 crore came from TCS. The question: now that TCS itself is under pressure from AI-related disruptions to its business model, does it make sense to keep milking this golden goose endlessly to fund other businesses that require long-gestation capital? Shouldn’t TCS be investing more to secure its own future rather than in group companies that could ultimately fail?

The bottomline is this: as a conglomerate, Tata Sons must have a clear policy on capital allocations not driven by sentiment or delusions. And this vision can come only from the majority owner, that is the Tata Trusts, where Noel Tata is the chairman.

Consider another conglomerate: the Reliance Group. Its holding company is Reliance Industries, which is listed and can raise both equity and debt if it so wanted on its own. It has many businesses under its fold, from new energy to refineries and petrochemicals, retail, media, telecom and finance. When required, if investment needs are great, it can shift ownership of a business that needs growth capital (Reliance Consumer Products, for example) into the mother ship, and then offload it again for listing when the time is opportune. This can be done because the mother ship is itself an operating company with free cash flows of its own, while Tata Sons is a passive vessel obsessed with privacy and seeking escape from nosy minority investors. Its dependence on one cash cow, TCS, is also not healthy, for TCS should ideally be seeking to grow its core business globally, and this may require investment to build products and platforms where it owns the IPR, and not be dependent on labour cost arbitrage in a world where this model is being disrupted by AI.

In one line: there are questions Noel Tata must ask Chandrasekaran, but there are questions he must answer too so that Tata Sons knows how it must prioritise its investments. All conglomerates need this clarity. Tata Sons more than others.