Why Tata Group Extended N. Chandrasekaran’s Tenure Beyond Retirement Age

Leadership Succession at Tata Sons

N. Chandrasekaran was appointed as a board member at Tata Sons in October 2016. He was appointed chairman by the government in January 2017. His first term was extended for the second time in February 2022. Chandrasekaran will be 65 in 2027, which is the typical age of retirement for Tata Group executives. Executives typically retire at 65 and can remain as non-executives until the age of 70.

But at a recent board meeting, Tata Trusts went ahead and gave him an extension. The move enables Chandrasekaran to remain chairman of Tata Sons for a third term despite having crossed the customary retirement age limit.

Reasons Behind the Extension

Market experts and consultancy agencies point out that the move, while unusual, is a continuation of the group's existing agenda. The group is dealing with complex issues like reviving Air India and economic uncertainty in the world. Some of the trustees are reportedly agitating for an IPO of Tata Sons. The group is diversifying into strategic areas like semiconductors, defence, and aviation in the process.

Experts opine that leadership continuity at this stage is extremely crucial. Chandrasekaran's experience and long-term vision have been regarded as advantages in coping with these strategic maneuvers.

Financial Performance Under Chandrasekaran

Tata Group's performance has considerably picked up in Chandrasekaran's tenure. Revenue has doubled more than twice, while net profit and market capitalization have tripled more than in the past five years. However, the group's market worth fell by ₹6.9 lakh crore in the previous year after a 30% decline in Tata Consultancy Services (TCS) shares.

Expansion and New Ventures

Under Chandrasekaran, Tata Group ventured into a number of new business lines. The group invested in semiconductor production and strengthened digital presence through Tata Digital's platform, Tata Neu. The platform has made consumer electronics, consumer goods, pharmacy, and fashion firms.

Experts opine that Tata Trusts feel Chandrasekaran's leadership would provide organizational stability during structural and shareholder changes. The optimism would have probably played a role in the waiver of the retirement age clause.