Two-and-a-half months after the Tatas stunned the world by sacking chairman Cyrus Mistry and recalling Ratan Tata as interim chairman, Natarajan Chandrasekaran, the 53-year-old MD and CEO of India's largest technology company TCS, was elevated as the first non-Parsi and first professional executive to head the country's largest, $108-billion conglomerate.
BCCL
The much-awaited announcement, which followed a board meeting of Tata Sons, the group's holding company, on Thursday evening, set to rest fevered speculation over the choice of successor. Significantly, it comes well before the four-month deadline set by the 79-year-old Tata and just days ahead of a hearing of the National Company Law Tribunal (NCLT) on a contempt of court petition by Mistry's companies against the Tatas.
Chandra, as he is popularly known, will take over as executive chairman from February 21, becoming the seventh in the 149-year history of the salt-to-software conglomerate and only the third 'non-Tata' after Mistry and Nowroji Saklatwala.
The five-member selection committee, said people familiar with its deliberations, wanted a "safe pair of hands" and felt an insider would have a stabilising influence in these challenging times. In a front-page report published on October 26, TOI had described him as a "strong contender in the race to succeed" when he was appointed a director of Tata Sons a day after Mistry's ouster.
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Chandra will be the second Tata Sons chairman, after Mistry, to not head the Tata Trusts, which own 66% of Tata Sons and were the force be hind Mistry's removal.
Besides being an insider, Chandra has also delivered consistently over the seven years he has led TCS, the crown jewel of the Tatas -revenues have grown 262% since 2009-10, net profit 247%, and it is the most valuable company in India with a market cap of Rs 4.62 lakh crore. It contributes 10% of the group's total revenues, 40% of its profit and 70% of its market value.
The search committee of Ratan Tata and four others is said to have initially considered a few external choices, but the turmoil within the group may have dissuaded some of them from considering a shift. Chandra joined what was then Tata Consultancy Services in 1987 as a computer programmer when F C Kohli was at the helm and TCS was a division of Tata Sons. He rose through the ranks and in 2007 was inducted in its board; two years later when S Ramadorai was elevated as vice-chairman, Chandra took over as its MD & CEO.
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JM Financial chairman Nimesh Kampani, a veteran dealmaker who has worked closely with the Tatas, said, "Chandra's leadership style has the Tata ethos and values ingrained in it. At Tata Consultancy Services, he has worked with several Fortune 500 chief executives across the spectrum, which should help him steer India's largest conglomerate. What strikes me most about Chandra is his friendly demaneour and hard work. He is the first professional to head Tata Group and this should cheer its managers."
Former Tata Sons director R Gopalakrishnan said, "He is an outstanding choice.It (his elevation) is a tribute not only to Chandra's own qualities but also to the succession planning and management development systems of TCS. It is a pleasure to see what was three decades ago an insignificant company grow to become a major contributor to profits (of Tata Group) as well as to talent."
BCCL
A Tata Sons statement said that Chandra had demonstrated exemplary leadership at TCS, adding that he would "inspire the entire Tata group to realise its potential, acting as leaders in their respective businesses."
However, some large investors are said to have concerns about whether Chandra, a lifetime technocrat, will be able to effectively manage the group's many old economy businesses, some of which are beset with huge debts and are vulnerable to global and cyclical fortunes.