N Chandrasekaran, the chairman of Tata Group, has said that he will not seek reappointment when his term ends in February.

The 63-year-old said the decision came after the board of Tata Sons could not reach a resolution on a five-year extension of his term, months after the proposal first came up.

The news sent shares of listed Tata companies plunging and has led to questions over what lies ahead for the gigantic salt-to-steel conglomerate that owns Air India, Tata Steel and Jaguar Land Rover.

Chandrasekaran’s resignation, which comes days ahead of Tata Sons’ annual general meeting, points to tensions that have been playing out for months after a boardroom power battle erupted between trustees.

The Tata Group is uniquely structured – a charitable arm called Tata Trusts owns 66% of the group’s parent company, Tata Sons. This has given the group tax and regulatory advantages, and allows it to carry out charitable activities, but experts say that its dual non-profit and commercial objectives have sometimes led to governance issues.

Tata Trusts has three nominees on the Tata Sons board. Reports have said that the board members have disagreed over issues such as board nominations, funding approvals and the public listing of Tata Sons. The group has not publicly commented on the discord.

The internal rifts threatened to distract the group while it was facing severe business headwinds including the revival of Air India, which it bought from the Indian government in 2022.

When the proposal for his extension was brought before the board in February, one board member did not support it, Chandrasekaran said in his statement without naming the person.

“In the absence of unanimous support, I chose to defer the decision,” he said, adding that there was no resolution even six months later.

“Tata Sons is a very large institution and there are many strategic projects that are under critical stages of execution. It is not only necessary to have a leader in place to lead the Group beyond Feb 2027, but also clarity on leadership is important for employees, investors, partners and other stakeholders,” he said.

Chandrasekaran was named the group’s chairman in 2017. He replaced the late Cyrus Mistry, whose abrupt removal from the post months earlier had triggered a bitter legal battle.

Before becoming chairman, Chandrasekaran was the CEO and managing director of the group’s high-profile global IT service provider, Tata Consultancy Services. He joined the group in 1987 – a 2017 press release announcing his appointment as chairman described him as a “Tata lifer”.

Ambareesh Baliga, an independent market analyst, said that when a person with Chandrasekaran’s stature stepped down like this, it was inevitable that the markets would react negatively.

“However, they have six months to find a good successor,” he said, adding that he thought it likely that the next leader would be chosen from within the group.