Tatas gear up for New Age

When Ratan Naval Tata hangs up his formidable boots in around 29 months, there will be a number of challenges confronting the new chairman of the Tata Group. Sumant Banerji and Sandeep Singh report. Blue-eyed boys of the Tatas' corporate steel-frame

When Ratan Naval Tata hangs up his formidable boots in around 29 months, there will be a number of challenges confronting the new chairman of the Tata Group. This is no longer the respected by close-knit Indian conglomerate of the post-Independence phase but a 21st Century empire with a global footprint.

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The sheer diversity and size of the group should be daunting for anyone stepping in to run Tata Sons, the holding company that controls the group. The group that has the largest combined market value and revenues in India has 96 companies and subsidiaries in seven business sectors across 85 countries. A telling statistic: nearly 65 per cent of revenues now come from outside India.

Business guru Ram Charan said Western corporate icons did not create successors to carry out a defined social purpose.

"In the Tata Group, in comparison, all their economic enterprises have in their DNA a succession planning that would continue to ensure a societal purpose in addition to the pursuit of generating economic wealth."

The new chairman to replace Ratan Tata will probably have seen the end of the current turmoil in the global economy but then the world he will inherit will be vastly different, following a structural powershift to emerging economies such as China and India

Tata's two big acquisitions in the last decade-- steelmaker Corus and luxury car maker Jaguar Land Rover -- fall on the wrong side of this shift.

"It is very important for the Tatas to find a better way to leverage those companies in the longer run," said an industry analyst.

Apart from the difficult-to-digest global acquisitions, at home, the group is struggling to make a mark in telecommunications and infrastructure – hot but challenging areas.

A senior financial services industry executive who asked not to be identified, said the new chairman would need to take all the group CEOs with him.

"While Ratan Tata gives enough freedom to the various heads at the group companies, if the new chairman looks for too much of control in various companies, it management may not go well," he said.

The new chief must balance freedom with control.