I actually stopped to look up the word, as I suspected it was a term of
familial endearment; yes, Thatha is Tamil for Grandfather.
Similar confusion surrounds an elderly chambermaid Toad referred to as Grandma by Peach in Super Mario RPG: Legend of the Seven Stars, however it is most likely that this was a term of
endearment carried over from the Japanese version, where it is more common to use
familial terms for non-relatives.