Transition at the Bombay House — the headquarters of the $83-billion Tata Group — has arguably been the most closely-watched development since July 2010, when Ratan Tata announced that he will be retiring in 2012. From the very next day media speculations threw up names Indian and foreign — from Pepsico chairman and CEO Indra Nooyi and former Vodafone CEO Arun Sarin to Citibank CEO Vikram Pandit and former Infosys chairman Narayana Murthy.
And, of course, Ratan Tata’s half brother and Tata International’s managing director Noel Tata. Most of us believed Noel would succeed Ratan — the Tata family lineage, the grooming from Trent to the group’s global businesses, the charming similarities with Ratan of avoiding the limelight, being married to Aloo Mistry, the daughter of Pallonji Shapoorji Mistry, the biggest shareholder of Tata Sons. To me, Noel was it, nobody else came close. But while that was a done deal, I kept thinking that the Tatas may, and probably will, look beyond the family. I was wrong.
Being part of the committee that was to select Ratan’s successor, Shapoorji Pallonji Group managing director and Tata Group director Cyrus P Mistry, 43, was not even in the reckoning. In fact, I find it rather strange that someone who’s doing the selection ended up being the candidate, something very unusual. Was there no other contender that India’s most respected business group could find or was it part of the plan? Guess we’ll have to wait for that one. As far as analysts are concerned, all of us overlooked the fact that with an 18% stake, the Mistry group is the largest shareholder of the Tata Group. With Mistry — the younger son of Pallonji Mistry — taking charge, the financial consanguinity remains strong.
This is not to undermine Mistry’s credentials. Since he joined the board of the family’s construction business — around the same time as Ratan took charge of the Tata Group in 1991 — he’s grown the business to $1.5 billion from $20 million, an average annual growth rate of 24% over two decades. On the non-financial front, he has overseen the company build one of the tallest residential towers, the longest rail bridge, the largest affordable housing project and has — like Ratan — taken the group global, to 10 countries. The recent 50,000-hectare expansion into agriculture and bio fuels in Ethiopia, for instance. But replicating that growth for a $83 billion empire could take some doing.
Clearly, the Tata Group is playing safe. In Mistry they have six competencies that an equivalent outsider won’t have. One, he’s family, through Noel. Two, he’s a shareholder, the biggest. Three, he’s an operational insider and has been associated with the group as a director for more than five years, since August 2006. Four, Ratan vouches for his humility, an important ingredient for success in a diversified conglomerate. Five, his religion — even though the chairmanship is moving to a non-Tata for only the second time, Mistry remains part of the closely-knit, 69,601-strong Parsi community. And six, an ethics match, from his first message as deputy chairman: “In keeping with the values and ethics of the Tata Group I will undertake to legally dissociate myself from the management of my family businesses to avoid any issue of conflict of interest.”
Beginning December 2012, the 100-company, 425,000-employee, 80-country footprint Tata Group will transit into the hands of continuity. We hope the orchestra these hands conduct in an age of discontinuity — global economic crisis, India at a crossroads of huge opportunity that offers a landscape of entirely new and unforeseen businesses, a structural shift in consumption and investment patterns and most important, a renewed global political-economy shift on ethics, transparency and inclusion going forward — is melodious.
Good luck, Mr Mistry.