New Tata boss to face formidable challenges

The unexpected departure of Tata Sons chairman N Chandrasekaran has left corporate India without a top executive. Finding his replacement will be a daunting task for the conglomerate, boasting a $300bn business empire that includes Jaguar Land Rover, Air India, and even manufacturing iPhones for Apple. The conflict between Chandrasekaran and Tata Trusts, the charity arm that holds a controlling stake in the conglomerate, centred around the possibility of a public listing and capital allocation for various new unlisted ventures.

These include semiconductors, e-commerce, and aviation, all of which are currently operating at a loss. The group is currently undergoing its largest capital investment cycle yet, with billions invested in projects like India's first chip fabrication plant and EV battery manufacturing. The new leader will need to navigate these challenges, according to Hetal Dalal from Institutional Investor Advisor Services.

The role requires a diverse skillset and experience in managing Tata Trusts, Tata Sons, and the various new businesses, as well as strong relationships with regulators and the government. The decline in TCS's contribution to cash flows, from 85% to less than half, has added to the complexity of the role. Despite this, the group's publicly traded companies have been performing well.

However, finding an individual who can seamlessly step into Chandrasekaran's shoes will be a significant challenge. The resignation of the Tata boss is expected to bring a period of uncertainty for investors, with the upcoming leadership change potentially reshaping the group's strategic direction. The focus will need to be on aligning the interests of the Trusts and Tata Sons, as the relationship between the two has been strained in the past. Repairing this relationship will be a top priority for the next person in charge.