Thursday, August 12, 2010

Tata panel to steer hunt for Ratan Tata's successor

MUMBAI: The search for a successor to Ratan Tata gathered momentum after India’s biggest conglomerate said a five-member panel would select its nextIndia Inc's most powerful CEOs | India Inc's most powerful women leaders | 10 commandments for CEOs and aspiring CEOs | Caricatures of the top 10 CEOs of India
chairman. Mr Tata, 72, head of the $70-billion salt-to-software group, who has built the world’s cheapest car and taken the group global, will step down in December 2012, creating a vacancy for what is widely regarded as the top job in corporate India.

The statement from Tata Sons, the group’s holding company, said the five-member panel included one “external member”. It did not name the members.

Two of the five members represent two trusts that are the major shareholders of Tata Sons while two are directors of Tata Sons, according to people close to the development. The two trusts, named after Ratan Tata and Dorabjee Tata, are major shareholders of Tata Sons. Tata Sons owns the majority of TCS, India’s biggest software maker, and has large holdings in companies such as Tata Steel and Tata Power.

Tata group veteran NA Soonawalla, who is a member of the Ratan Tata and Dorabji trusts, is part of the panel, said the people close to the development. RK Krishnakumar, vice-chairman of Tata Tea and Indian Hotels, and a director of Tata Sons, is representing the group holding company. There is speculation that Keki Dadiseth, former director of Unilever, could be on the panel.

“Other directors such as Arun Gandhi, R Gopalakrishnan and Ishaat Hussain are not part of the panel,” said a top Tata group executive. Mr Tata would act as a mentor of the panel, the people said. There is no clarity on the identity of the external consultant. The name of a prominent management guru is doing the rounds.

The successor would be chosen based on his ability to grapple with the complexities of globalised environment, according to the Tata Sons statement. “It would certainly be easier if that candidate were an Indian national. But now that 65% of our revenues come from overseas, it could also be an expatriate sitting in that position with justification now,” Mr Tata had said in an interview with the Wall Street Journal.

There has been speculation about the chances of Arun Sarin, the former boss of Vodafone PLC, and Indra Nooyi, the current CEO of Pepsi. “You might want an Indian who has worked outside India. This is a great international business,” says Nigel Nicholson, professor, department of organisational behaviour, London Business School.

At the helm since 1991, Mr Tata has led a spectacular foray overseas, resulting in 65% of the group’s revenues coming from abroad. In 2007, Tata Steel paid $13 billion to buy Anglo-Dutch steelmaker Corus while Tata Motors paid $2.3 billion to acquire Jaguar-Land Rover the next year.

In all the Tata group's 98 operating companies have annual revenues of $71 billion and 357,000 employees, according to its website.

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