Tata Sons' new businesses sink deeper into red

Mumbai: The private businesses of Tata Sons envisioned to take the conglomerate to its next stage of growth sank deeper into losses in FY26, led by aviation, digital commerce, electronics assembling and battery manufacturing.

Overall, losses at Tata Sons’ 16 privately held businesses nearly doubled in FY26, rising to ₹27,854 crore from ₹15,311 crore in FY25, the Tata Sons annual report published on Monday showed. The four new businesses—Air India, Tata Digital, Tata Electronics, and Agratas—accounted for the lion’s share of the losses, as they remain in their growth stage, requiring significant capital investment, before they make money.

At a Tata Sons board meeting in February, Tata Trusts chair Noel Tata had questioned the hefty losses at these businesses. The board deferred a final decision on a third five-year term for Chandrasekaran after Tata's intervention. Tata Sons had ventured into the new businesses under the leadership of Chandrasekaran, who was handpicked by the late Ratan Tata to lead the conglomerate. Tata Trusts are the largest shareholders of Tata Sons, holding 65.9%.

In the annual report, Chandrasekaran compared the ongoing large investments to Tatas' earlier endeavours like the Indian Institute of Science, steelmaking, software services, and fundamental research. “Each of these bets looked audacious, even imprudent, at the time they were made. Each took decades to prove itself. And each, in hindsight, turned out to be exactly what the nation needed," he wrote in his letter to shareholders.

Appointed as Tata Sons chairperson in February 2017, Chandrasekaran's second five-year term ends in February 2027. In FY26, he was paid ₹159 crore in compensation including a commission of ₹141 crore. This compares to ₹156 crore total compensation in FY25.

An email sent to Tata Sons seeking comment went unanswered.

Significant investment

“Losses in a diversified business group should be evaluated through the prism of the business lifecycle rather than in isolation,” said Monish G. Chatrath, managing partner at MGC Global Risk Advisory, a risk consulting firm. Businesses in aviation, digital platforms, advanced manufacturing, and semiconductor ecosystems often require significant upfront investment and longer gestation periods before they achieve sustainable profitability, he said.

“From a risk management perspective, the critical question is not whether losses arise during an investment phase, but whether they are accompanied by disciplined capital allocation, effective execution and measurable progress against clearly defined strategic milestones,” he said.

Air India remained the loss-leader in FY26. Its losses more than doubling to ₹22,238 crore in a forgettable year where the carrier endured one of India’s worst aviation disasters in recent history, and later bore the brunt of a surge in fuel costs as the Gulf war broke out. The airline's revenue declined by nearly a tenth to ₹71,870 crore.

“This year, Air India faced three external headwinds. Air space closures; West Asia conflict-driven fuel price hikes and foreign exchange fluctuations; and the crash of AI171 made it the most challenging year for Air India,” Chandrasekaran wrote.

Tata Digital, which houses the e-commerce application Tata Neu, continued to be the second biggest loss-maker, losing ₹4,974 crore during the year with revenues of ₹35,990 crore.

Tata Sons marked down Tata Digital's valuation in June when it invested ₹2,970 crore in the company at a valuation of $10.3 billion, which is 5.5% lower than its previous valuation, Mint reported in June.

“Over the past few years, Tata Digital has navigated multiple complexities across its businesses,” Chandrasekaran noted. The Indian e-commerce market shifted rapidly towards quick commerce, he said, adding Tata Digital’s online grocer BigBasket was adapting to this change.

Chandrasekaran highlighted the Tata Neu's pivot from being an all-rounder online commerce application to focussing on financial services. “In the coming year, Tata Neu will double down on financial services, aim to increase payments monthly transacting users by 10x, and expand our ecosystem across lending and insurance,” he said.

Chips on top

Tata Electronics, the group’s foray into smartphone assembly and semiconductor manufacturing, was the group’s highest grossing private business in FY26, surpassing Air India. The company’s revenue doubled year-on-year to ₹1.3 trillion.

However, the iPhone contract manufacturer also reported a deeper loss at ₹1,611 crore compared to ₹70 crore lost in the previous year. During the year, Tata Sons infused ₹3,000 crore into the company.

Lastly, Agratas, which is making two giga factories for battery manufacturing, one each in India and the UK, reported a loss of ₹1,101 crore compared to ₹741 crore. The business is yet to start commercial operations. Tata Sons invested ₹1,465 crore in the company during FY26.

The other dozen unlisted companies of Tata Sons made a cumulative profit of ₹2,070 crore compared to ₹969 crore in the previous year. Three businesses - Tata Projects, Tata Realty and Infrastructure, and Tata Play reported losses, while Tata AutoComp and Tata AIG were the biggest money makers.

The annual general meeting of Tata Sons scheduled for 18 August is under a cloud following a Maharashtra charity commissioner order prohibiting Sir Ratan Tata Trust from holding board meetings or taking decisions affecting its composition. Sir Ratan Tata Trust (SRTT) and Sir Dorabji Tata Trust (SDTT) together control 51.4% of Tata Sons, while the Tata Trusts together own 65.9% of the Tata Group holding company. Under section 87 of the Articles of Association of Tata Sons, SRTT and SDTT jointly nominate the directors from the majority shareholders of Tata Sons who can attend the shareholder meeting. Since SRTT cannot undertake any decisions, it is not clear how Tata Trust will nominate a member for the AGM, failing which a quorum for the meeting may not be present.