Chandrasekaran, Ramadorai lead race for next Tata Group chairman
The probable list for the next head of the $103-billion Tata Group is getting thinner, especially since the search committee looking for the chairman just has four months to complete its task.
As the group hunts for a candidate with a blend of performance and Tata experience, a few names have come up, which fits the bill. They include Tata Consultancy Services (TCS) CEO N Chandrasekaran, Jaguar and Land Rover chief Ralph Speth, Trent MD Noel Tata, Pepsico head Indra Nooyi and former Vodafone chief Arun Sarin. Veteran Tata hand S Ramadorai’s recent exit from government’s skill development agencies has also triggered speculation about his appointment to the top post.
Chandrasekaran and Speth were elevated to the board positions at Tata Sons on October 25, a day after Mistry was ousted as group chairman.
Bombay House, the headquarter of the Tata Group, is now according top priority to the search, even as it counters charges from ousted chairman Cyrus Mistry. The urgency is underscored by concerns among stakeholders about the leadership confusion, especially since Mistry is still the chairman of group companies, including Tata Motors, Tata Steel and Indian Hotels. He is still a director on Tata Sons’ board.
Recent reports suggest that Ratan Tata has already asked for old hands to come back to Bombay House to form a new top management, entrusting veteran colleagues such as Prasad Menon to prepare so that the new chairman can hit the ground running.
Tata Sons declined to comment on the story, saying that the company board has appointed a search panel to select the next chairman. The panel consists of TVS Group chairman Venu Srinivasan, Bain Capital’s Amit Chandra, former ambassador to US Ronen Sen and Lord Kumar Bhattacharya, apart from interim chairman Ratan Tata.
According to top sources at Bombay House and people who have assisted the group in various strategies as well as long-time business partners, TCS MD N Chandrasekaran, popularly called Chandra, is one of the strongest contenders. The 53-year-old’s tenure at India’s largest software services company has seen its profits surge three fold to R24,375 crore in six years to September 30, 2016. Dividend from TCS contributed 77% to Tata Sons’ revenue in 2015-16. What works in his favour is also the fact that beside TCS’ stellar performance, Chandra is a ‘Tata man’, having joined TCS straight after college in 1987.
Chandra’s predecessor at TCS, S Ramadorai, also has a strong case. Beginning 1969, Ramadorai spent his entire working life in TCS, before stepping down as CEO in 2009. Between 1996 and 2009, he took TCS from less than half-a-billion-dollar company to one with a balancesheet of $6 billion. He continued as the vice-chairman of TCS till 2014, while holding the chairman’s post in other group companies, including Air Asia, Tata Technologies and Tata Advanced Systems. Ramadorai is also an independent director in Hindustan Unilever, Asian Paints and Piramal Enterprises, something that could augur well to manage group companies like Tata Beverages, Indian Hotels and Tata Motors. There’s a small hitch though. He has just four years to hit 75 -- the maximum age limit for a Tata chairman according to the company’s internal rule book.
Among the others, Ralph Speth, 61, has been instrumental in turning around Jaguar Land Rover. Along with TCS, JLR is the other cash cow for the Tata Group.
“One thing is very clear. The group would want to have someone from inside, who is familiar with their values, conduct and ways of doing business. But if weightage is to be given to business performance alone, then probably someone with global experience will be brought in,” said Richard Rekhy, chief executive of KPMG India.
About 65% of Tata group’s revenue comes from outside India.
Recently, Brickwork Ratings revised Tata Steel’s credit rating to BWR AA from BWR AA+ with a negative outlook due to the “uncertainty consequent to the recent change in top management at holding company/group level which could slow down vital decisions such as cost cutting and deleveraging the balance sheet concerning the unprofitable UK operations and restructuring of the European business.”