With Tata Group chairman Ratan Tata scheduled to step down on December 28, 2012 when he reaches the age of 75, the search is on to find a suitable successor. When asked by shareholders of Tata Chemicals Limited at the annual general meeting on August 9, 2010 whether the next chairman would be "Parsi, Indian or a foreigner,” Tata replied that his successor should be "the right person and not anti-Parsi or pro-Parsi. The Tata Group is an Indian group and we should not be looking (at it) as a Parsi group.”
On August 4, the Group had announced that Tata Sons (the holding company) had formed a panel to find a successor, who will be named by next March. "The Group has opted for the right institutional mechanism to conduct the search — a five-member committee that does not include the incumbent, but will have representation from the board (of Tata Sons), from two key Tata family trusts (Sir Dorabji Tata Trust and Sir Ratan Tata Trust) and include an outsider. In sum, a thoroughly professional exercise, not usually the practice in India Inc (Incorporated),” analyzed The Financial Express, August 6, 2010 in its editorial. Ratan Tata stated that he had made the provision to have a committee to choose his successor 10 years ago and set the parameters for the panel, reports The Times of India, August 10.
Ratan Tata (left): succession planning; Noel Tata: among the contenders
The selection panel consists of Lord Kumar Bhattacharyya, Cyrus Mistry, Shirin Bharucha, R. K. Krishna Kumar and Noshir Soonawala. Bhattacharyya, who is 70, is a member of the British House of Lords and a director of the Warwick Manufacturing Group. He is widely believed to have played a part in encouraging the Tatas to invest in Corus which Tata Steel acquired in 2007. Mistry, 42, is the youngest member of the panel and on the Tata Sons’ board. Son of Pallonji Mistry (who is the largest single shareholder in Tata Sons with a 18.5 percent stake), Cyrus is also on the board of Shapoorji Pallonji and Company, Forbes Gokak, Afcons Infrastructure, etc. He has also been an independent director on the board of Tata Power. As has been oft mentioned in the Press, Cyrus’ sister Aloo is married to Ratan’s half brother Noel Tata. Legal advisor to the Tata Group, Bharucha is renowned for her active role in preserving Bom-bay’s heritage, fighting against great odds in tandem with other social activists to restore "green lungs” like the Oval Maidan, the Horniman Circle Garden, the Kala Ghoda Art District, etc. She was also part of the Tata Electoral Trust that the Group had set up to infuse transparency in electoral funding. On the selection panel, Bharucha represents the Tata Trusts which own over 50 percent in Tata Sons.
Krishna Kumar, 71, has been with the Tatas for over 45 years and was involved with the first big ticket global acquisition of the Tatas — that of UK-based tea major Tetley in the year 2000. He is a member of the Ratan Tata Trust, but on the panel he represents Tata Sons. Soonawala, 75, was vice chairman of the Tata Sons board when he retired in July. A specialist in finance, Soonawala has played a key role in consolidating Tata Sons’ holding in the various Tata companies and in the overall growth of the Group. On the panel he represents the Tata Trusts.
With $ 70 billion in annual revenues, 98 operating companies, 357,000 employees worldwide, the Tata Group derives 65 percent of its revenue from overseas.
Former Tata Steel head Russi Mody in a newspaper article has endorsed however a Tata insider for the post. "I wonder what would someone from outside do at the Tatas. So far there has always been a good chairman from the Tata family. There is no reason why that should not continue in the years to come.”
In a move widely seen in the media as putting in place succession planning, 53-year-old Noel Tata was appointed the managing director (MD) of Tata International with effect from August 2010. Earlier he had been made non executive chairman of Tata Investment Corporation Limited. Son of Naval and Simone and half brother of present Tata Group chairman Ratan Tata, Noel has over the last 12 years steered the Group’s retail arm Trent Limited, which runs the Westside (clothes and lifestyle), Landmark (books and music) and Star Bazaar (hypermarket) chain of stores, growing its consolidated revenues. Noel will now continue as Trent’s non executive vice chairman; Tata Sons’ director Farrokh Kavarana is the non-executive chairman.
Noel’s new assignment will give him a broader palette to brush with and prove international credentials. As its name indicates, Tata International specializes in worldwide marketing, global sourcing and distribution of products and has two main verticals — the Engineering Business Unit and the Leather Business Unit. With 47 offices worldwide, the former provides services for the mining, railways, power, steel, aluminum and automotive accessories sectors. The latter manages one of the world’s largest tanneries at Dewas in Madhya Pradesh, design studios in Italy and Spain and manufacturing facilities in India, China and Indonesia, as per its website www.tatain-ternational.com It is a partner and supplier to global brands like Mango, Escada, Pierre Cardin, Hush Puppies, Samsonite, etc. Its research and development department has made internationally acknowledged breakthroughs, being the first company in Asia to receive ISO 9000, ISO 14000 and the Eco-Mark certification (products free from banned chemicals).
Tata International’s subsidiary, Tata Africa Holdings, already has a good presence in that continent and seeks to double its revenues to one billion dollars in a couple of years. In the Group’s global acquisitions of Tetley, Corus, Jaguar-Land Rover, Tata International is said to have played a not-insignificant part, according to industry experts.
At Tata Investment Corporation (TIC), Noel has stepped into the shoes of Noshir Soonawala who moved out on turning 75, the mandatory limit for non-executive directors of Tata Group companies. TIC is a non-banking financial company. It was promoted by Tata Sons (the Group’s holding company) in 1937 and went public in 1959. TIC, along with Tata Sons, promotes the Tata Mutual Fund. Farokh N. Subedar is TIC’s vice chairman and, as per The Times of India of May 3, 2010, has also been made Tata Sons’ chief operating officer.