Interviewees said that Tata Sons Ltd., the holding company of India’s largest conglomerate, is considering a historic revamp in its leadership structure by creating a CEO role to help improve corporate governance.
Under the proposed plan, the CEO said that while guiding the sprawling businesses of the 153-year-old Tata empire, the president would oversee the CEO on behalf of shareholders who asked not to be identified when discussing private information. The approval of Ratan Tata, the eighth chairman of controlling Tata Trusts, is seen as key to implementing the change.
The current chairman of Tata Sons, Natarajan Chandrasekaran, is considering an extension after his term expires in February, while Tata Steel Ltd. Presidents of various Tata group companies are being considered for the CEO position. People said that no final decision has been made and that plans and details are still subject to change. A Tata Sons spokesperson declined to comment. Emails to Tata Trusts and Ratan Tata went unanswered.
The proposal comes months after Ratan Tata, 83, former head of Tata Sons, won a years-long legal battle with his successor, Cyrus P. Mistry, who alleged mismanagement in the group and sued the patriarch for his dismissal in 2016. Help plan a future for the holding, which is at a crossroads after more than two decades of expansion under the leadership of Ratan Tata. It is unclear who will replace him as head of Tata Trusts, which owns 66% of the holding that runs the empire, which dates back to 1868.
A new group CEO will have to overcome many challenges. As Tata Steel races to reduce its $10 billion net debt burden, Tata Motors, owner of iconic British brand Jaguar Land Rover, has suffered a three-year loss through March 2021. The group’s plan to move into the digital space and capitalizing on India’s growing online shopping base has also not yet come to fruition. Although at the disposal of Tata Consultancy Services Ltd., Asia’s largest software services provider, the plan to launch an all-in-one e-commerce super application to market its range of consumer products and services has been delayed.
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With over 100 businesses and more than two dozen listed firms, the Tata group had total annual revenue of $106 billion in 2020. Its 750,000 employees manufacture cars and trucks, blend tea, forge steel, sell insurance, write software, operate telephone networks. and packet salt, among many other things.
The proposed leadership revision is also in line with India’s market regulator’s recommendation that the country’s top 500 listed companies have a separate chairman and CEO by April 2022 for better governance. People said that although Tata Sons is not listed, the change will help comply with the rule.
The addition of a professional executive to the holding also sheds light on how Ratan Tata, who continues to shape the group, can envision his own transition from the current semi-retired role of honorary chairman.
Although Ratan Tata says he is no longer actively involved in business decisions, he still has significant influence over the management of the group through Tata Trusts’ leadership. In July, after an Indian newspaper reported that Chandrasekaran’s extension as president was “unofficially approved”, Ratan Tata issued a statement saying that the board had not made a decision and that no one approached him on the issue, reinforcing his influence.
Despite familial ties, Ratan Tata’s dominance over the group also stems from his track record as head of Tata Sons between 1991 and 2012. A legendary figure in Indian business, Tata has put the Tata group on the global map with a series of eye-catching deals. Over the past two decades, from the $2.3 billion acquisition of automaker JLR to the $13 billion acquisition of British steel company Corus Group Plc.