Mumbai, Aug. 4: Old timers recall the period when Ratan Tata took over the reins at the Tata Group in 1991, he had to contend with several well entrenched satraps of various group companies. It seems that he is trying to make the transition smoother for his successor. On Wednesday, Tata Sons announced that it is forming a five-member committee that will scout for the successor to Mr Ratan Tata, who retires in December 2012.
His half brother, Mr Noel Tata, is believed to be a frontrunner for the position. The past few weeks have seen the younger Tata taking on a bigger role in group’s functioning. One booster for the younger Tata could be the fact that his father-in-law, Mr Pallonji Mistry, is one of the biggest shareholders of Tata Sons.
However, in a rare statement late last year, Mr Ratan Tata had said that candidates from within and outside the group are being considered as possible successors. He had also said that his successor could also be an expatriate — a possibility now because the group gets the bulk of its earnings from outside India. “The selection process for a prospective candidate would consider suitable persons from within the Tata companies, other professionals in India as well as persons overseas with global experience,” says the short announcement put out by Tata Sons, mirroring the sentiment. “The group would require someone with experience and exposure to direct its growth amidst the challenges of the global economy,” the announcement says.
The almost two-decade long tenure of Mr Ratan Tata as the group’s head has seen the primarily Indian group become a multinational, with bulk of its revenues coming from global markets.
The new millennium has seen various group companies including Tata Steel, Tata Motors, Tata Chemicals going in for large global M&A deals.
Interestingly, the past few years have also seen some top level changes in the various Tata group companies. In June 2009, Mr Ravi Kant, then managing director of Tata Motors, retired from his executive position. In October 2009, Mr B. Muthuraman retired from his executive position in Tata Steel. That month saw one other high profile replacement — of Mr S. Ramadorai as the CEO of Tata Consultancy Services. All the three occupy the position of non-executive vice-chairman in the companies they headed earlier. Some see this change of guard as a part of measures to ensure that Mr Ratan Tata’s successor doesn’t face entrenched satraps, like he had to in 1991.