Tata Group's New Chairman Faces Many Challenges Ahead

By Shakir Husain NEW DELHI, Jan 19 (Bernama) -- In India, Tata's omnipresence can't be overemphasised. You can't live without using Tata products. If you don't have their salt in your food, then maybe your home appliances are bought from their stores or you probably watch television on Tata's satellite TV network. Step out of your home. You probably drive a Tata car to work or take a public transport bus made by the company. At work, there's Tata software. Traveling to another city? You can fly a Tata airline (AirAsia India is 49 percent owned by Tata Sons, national carrier Air India began as Tata Airlines, Vistara Airline is a Tata-Singapore joint venture), stay in a Tata hotel and buy Tata-made gifts for your spouse. Tata is present in an Indian's life in more ways than one can see. So, when the Tata Group last week appointed a new chairman it made big headlines. He is Natarajan Chandrasekaran, 53 years of age, a holder of master's degree in computer science from Tamil Nadu, and a Tata Group insider being the chief executive officer of Tata Consultancy Services (TCS). With US$16.5 billion in revenues last year, TCS is the group's cash cow and India's most valuable company. The appointment of Chandrasekaran, called fondly as Chandra by his colleagues, assumes added significance because the conglomerate has been mired in a boardroom controversy since Oct 24 last year following the shock removal of Cyrus P. Mistry as chairman. Tata patriarch Ratan Tata, Mistry's predecessor, took over as boss on an interim basis as a committee searched for a regular chairman to lead the group that has annual revenues of US$103 billion. Chandra is the first Tata Sons chairman who is not from the Parsi community, a small religious minority that has created some of the biggest business successes. He's also the third non-Tata after Nowroji Saklatwala (1932-38) and Mistry (2012-16) to occupy the chairman's position at the conglomerate that today employs 660,000 people in some 100 business entities. Chandra will formally take up his new role on Feb 21. His challenges will be immense and these go beyond just managing a group that's not only vast and diverse but spread across geographies. He may have proved his leadership in the software sector, but steel, energy, housing, telecom, cars, defence, aviation, hospitality, retail are also vital parts of the Tata behemoth. There will be expectations of higher dividends from the Tata Trusts, which control 66 percent of Tata Sons, the holding company of the group. And Tata believes in expanding no matter how big the challenges are. One of the reasons Mistry lost confidence of Tata Sons was his apparent willingness to exit businesses that weren't doing well. Ratan Tata believed in building a legacy and his tenure was marked by daring acquisitions such as Corus Group and Jaguar Land Rover, and the launch of India's cheapest car Nano. Chandra will also have to tackle the issues raised in the acrimonious statements issued by Mistry and Tata Sons. These include corporate governance, mounting financial problems at Tata Steel's European business, rights of minority shareholders, role of the Tata Trusts, and what influence Ratan Tata himself exercises over the management. Mistry in his counterattack on October 25 had alleged being rendered a "lame duck" chairman and said he wasn't allowed a free hand in executing his plans. Countering him, Tata Sons has accused Mistry of misleading the selection committee in 2011 by making "lofty statements" about his plans for the group and not delivering on his promises in four years as chairman. Another charge was that he went about "systematically diluting" the representation of Tata Sons on the boards of various companies. Mistry, whose Shapoorji Pallonji family has about 18 percent shareholding in Tata Sons, is legally challenging his removal. He is backed by Nusli Wadia, a prominent businessman who was removed as director by some key listed Tata companies. Wadia has initiated a defamation case against Tata. It will be interesting to see how this corporate fight progresses. There has been a public war of words accompanying the boardroom battles. After three months of turmoil, Bombay House, the Tata headquarters in Mumbai, must be hoping for calmer days as Chandra gets ready to take charge. -- BERNAMA