N Chandrasekaran takes over Tata Sons: Here are the challenges he faces
Come Tuesday and N Chandrasekaran will walk into the corner room in Bombay House as the new chairman of Tata Sons. The day will also mark the ascent of Rajesh Gopinath as the new CEO and managing director at Tata Consultancy Services (TCS).business Updated: Feb 22, 2017 10:21 IST
N Chandrasekaran walked into the corner room in Bombay House on Tuesday as the new chairman of Tata Sons. And as he began the day by chairing the company’s board meeting, Chandrasekaran became the third non-Tata, after Nowroji Saklatwala and Cyrus Mistry, to do so.
Fondly called “Chandra”, the 53-year-old Tata veteran grew up with TCS. He started as a software programmer in 1987; rose through the ranks to take the top job when he was just 46 and become one of the youngest CEOs in the Tata group in 2009. Under him, TCS revenues grew 24% annually.
Chandra who succeeds Cyrus Mistry at Tata Sons, faces challenges in almost all group companies; protectionism, legacy issues, litigations are just a few uncertainties staring the new chairman in the face.
His immediate job will be to focus on the loss making Tata Teleservices, which is crumpling under aggressive competition from Reliance Jio. Speculation is rife that Tata Tele has sought to be a part of the on-going RCOM-Aircel merger.
Tata Tele also faces NTT DoCoMo at several courts inside and outside India. The Japanese company has sued it to ensure that it buys back its 26.5% stake in Tata Tele.
Then, there is the web of litigations and allegations levelled by ousted chairman Cyrus Mistry.
Tata Steel continues to lose money in UK. Tata Motors is under pressure from low sale volumes of JLR and weak product mix in its commercial vehicle segment. In its Q3 results, Tata Motors reported a 96% plunge in consolidated profit after tax.
As growth slows and concerns rise about tighter H1B visa rules shares of Indian IT companies are under pressure. TCS has already announced that it is considering a buyback of shares.
Chandra has already proven his operational and leadership skills at TCS, but he now has to consolidate the 150-year-old group’s unwieldy operations and steer it through the crisis following Mistry’s ouster. He has to wean the group from its dependence on TCS and JLR.
Chandra’s biggest challenge will be that he has never handled some of Tata’s brick and mortar businesses such as steel and automobiles, neither has he restructured a conglomerate.
“No one comes with the experience of leading a company as complex as Tata Sons,” said Kavil Ramachandran, professor at the Hyderabad-based Indian School of Business. “Chandra might have the potential but he has to build himself to lead a $103-billion conglomerate.”