Decisions Awaited on Chairmanship of Tata Group Companies

The operating principle: change with continuity. After all, for a group as diversified and large as the Tatas, the board members represent the institutional memory and also embody the values of the group. So what’s the likely scenario?

For one, there’s room for some new faces on the Tata Sons board. Especially since there have been three retirements— Noshir Soonawala, JJ Irani and Shyamal Gupta—in the last three years. And Alan Rosling resigned to pursue his own entrepreneurial ambitions.

Clearly, Ratan Tata faces a set of interesting choices before Mistry takes over from him and it is possible the board positions were left vacant as he wanted to confer with his successor. Does he elevate B Muthuraman, Ravi Kant, S Ramadorai and Prasad Menon to the Tata Sons board? They are all between 65 and 67. That gives them anywhere between two to four years before they step down at 70. That’s well within the realm of possibility. It would recognize their outstanding contribution while giving Mistry enough time to get to know the Group and decide on his next course of action.

For now, the more interesting question is: who takes over as chairman of the major group companies, once Ratan Tata checks out next year? Ratan Tata had a lot of operational experience at Tata companies during the course of his career. After working at the shop floor at Tata Steel he’d turned around NELCO. Will Cyrus Mistry immediately step up and take on the mantle of Chairman of Tata Steel, Tata Motors and Tata Consultancy Services? Or will these same key professionals be upgraded from vice chair as chairman of their operating companies and also gain a seat on the Tata Sons board?

While the latter might seem like a more pragmatic step, it could also reduce the powerful role that a group chairman has played. When Ratan Tata took over, he had to wrestle for power with satraps in the group with seemingly untrammeled powers. The situation is quite different now and Mistry may choose to initially rely on the old guard for a few years till he settles in.

 

Either way, it isn’t as if Ratan Tata will be entirely out of the equation. Under the constitution of the trusts, he has the option to remain lifetime chairman of the three Tata trusts and nominate members to the board. While the trustees vote in their individual capacity it is fair to assume Ratan Tata still has overall control. Should something untoward happen, he would still control the ultimate destiny of the Tata group.