Wednesday, August 4, 2010

Tata group starts search for Ratan Tata’s successor

The Board of Tata Sons Limited has formed a Selection Committee, comprising of five members including an external Member, for eventually deciding on a suitable successor to Mr Ratan Tata. Mr Tata is due to retire only at the end of December 2012. The Committee has commenced its work. The move comes within days of Noel Tata's elevation as head of the $72 billion Group's international operations, strengthening speculation that he would be the successor to his half-brother Ratan Tata, who is credited with taking the Tata name global. It was, however, not clear whether who the members were and queries about Ratan Tata himself being part of the search committee yielded no response from the Group's spokesperson. "The Board of Tata Sons Ltd has formed a selection committee comprising five members, including an external member for eventually deciding on a suitable successor to Ratan N Tata," Tata Sons, the Group's holding company, said in a statement. Tata, 72, would be hanging his boots in December 2012 when he would turn 75 -- the retirement age fixed by the group. Earlier this year, Ratan Tata had said: "I said that after (launching small-car) Nano, it will be a good time to step down. I still have a deadline for my retirement. "I do have the responsibility to have a successor and both these things will take place." Although the group is over 100 years old, it was only in 2006 that it earned global recognition when Ratan Tata spearheaded the buyout of Anglo-Dutch steel maker Corus for about $12 billion. Tata followed this up with another big ticket purchase of Jaguar Land Rover, the luxury British auto brands, from Ford in 2008 for $2.3 billion. Ratan Tata, who took over as Group Chairman in 1991 from J R D Tata, had said earlier that "I do not want to go out on a wheelchair." About the qualities he looked for in his successor, Tata had remarked: "It should be stated and that person should become known for filling the position and not just waiting in the wings. I know what happened in my case." Tata Sons said in the statement today that the Group would require someone with experience and exposure to direct its growth amidst the challenges of the global economy. "The selection process for a prospective candidate would consider suitable persons from within the Tata companies and other professionals in India as well as persons overseas with global experience," it said. Apart from being from Tata family, Noel, 53, is also the son-in-law of Pallonji Mistry, who according to the US business magazine Forbes, has over 18 per cent stake in Tata Sons and is widely believed to have the value system of the group, a must for being the successor. Pallonji's son Cyrus Pallonjy Mistry is on the Board of Tata Sons. Noel also is in-charge of Tata Investor Corporation and was responsible for Trent, the retail arm of the Tata Group.

A day after Tata Group created a five-member selection committee to find a successor for Ratan Tata, RK Krishna Kumar, a director at Tata Sons Ltd, said the successor is likely to be decided by February-March 2011. Mr Tata, 72, head of the $70 billion salt-to-software group, who has built the world’s cheapest car Nano and taken the group global, will step down in December 2012. Post the announcement there is intense speculation going on whether despite the attempt to professinoalise the process the search will end with Ratan Tata's cousin: Noel Tata, currently heading Tata International. But sources within the Tata Group insist that the process will be completely neutral. Sources say that Noel is not naturally in a line to succeed but added that the candidate must also be seen as willing to 'imbibe Tata ethos'. In the past similar committees have been used by Tata group companies for nominating independent directors or selecting CEOs. The Board of Tata Sons Ltd on Wednesday formed a selection committee comprising five members, including an external member for eventually deciding on a suitable successor to Ratan N Tata. The composition of the committee is largely in house: members of Sir Dorbaji Tata trust and Sir Ratan Tata Trusts, the holding company of Tata Sons. But experts say that the Tata's struggles to integrate their overseas expansions, makes the case stronger for an international CEO as the replacement. Yet the mystique of the Tata surname may be hard to overcome. Ratan Tata himself is not part of the search panel – he willl advise it from time to time. But he leaves behind a towering legacy: both corporate, and personal, one that will make the search for a successor, not an easy task.