Tata Sons Ltd., the holding company of India’s largest conglomerate, is considering a historic overhaul of its leadership structure by creating a chief executive officer position to help improve corporate governance, those involved in the deliberations said.
Under the proposed plan, the CEO will lead the sprawling businesses of the 153-year-old Tata Empire, while the chairman will oversee the CEO on behalf of shareholders, the people said, asking not to be identified for discussion. private information. The approval of Ratan Tata – the octogenarian chairman of majority owner Tata Trusts – is seen as key to implementing the change, they said.
Current Tata Sons chairman Natarajan Chandrasekaran is being considered for an extension after his tenure ends in February, while executives from various companies in the Tata Group, including Tata Steel Ltd., are being assessed for the CEO role. people said. No final decision has been made, and the plan and details could still change, the people said. A spokeswoman for Tata Sons declined to comment. Emails to Tata Trusts and Ratan Tata have not been answered.
The proposal comes months after former Tata Sons chairman Ratan Tata, 83, won a multi-year legal battle with his successor Cyrus P. Mistry, who alleged mismanagement within the group and sued the Patriarch for ousting him in 2016. The proposed makeover could help chart a future for the conglomerate, which is at a crossroads after more than two decades of expansion under Ratan Tata. It is unclear who will succeed him as chairman of Tata Trusts, which owns 66% of the holding company that manages the empire whose roots date back to 1868.
The shares of most of the listed companies in the Tata group rose as a result of the report. Tata Consultancy Services Ltd., climbed to 1.3%, while Tata Motors Ltd. rose as much as 2% on Tuesday, as the equity benchmark was largely flat.
A new CEO of the group will face many challenges. Tata Steel is working to reduce net debt by $ 10 billion, while Tata Motors, owner of iconic British brand Jaguar Land Rover, has suffered three consecutive years of losses until March 2021. The group’s plan to s Venturing further into the digital space and capitalizing on India’s growing online shoppers base has yet to bear fruit. While Tata Consultancy Services Ltd., Asia’s largest software services provider, is at its disposal, plans to launch an all-in-one e-commerce superapplication to market its line of consumer products and services have been delayed.
With around 100 companies and more than two dozen listed companies, the Tata Group achieved a combined annual revenue of $ 106 billion in 2020. Its 750,000 employees make cars and trucks, blend tea , forge steel, sell insurance, write software, operate telephone networks. and packing salt, among others.
The proposed management overhaul is also in line with a recommendation from the Indian Market Regulator that the country’s 500 largest listed companies have a separate President and CEO by April 2022 for better governance, people said. Although Tata Sons is not listed, the change would help comply with the rule, people said.
The addition of a professional manager at the top of the holding company also highlights how Ratan Tata – who continues to shape the group – might envision his own transition from his current role as semi-retired chairman emeritus.
Although Ratan Tata claims that he is no longer actively involved in business decisions, he still exercises considerable influence over the management of the group through his leadership of Tata Trusts. After an Indian newspaper reported in July that Chandrasekaran’s prorogation as president was “officially ratified”, Ratan Tata issued a statement saying the board had not made a decision and no one had approached him on the subject, thus strengthening his influence.
Despite the family tie, Ratan Tata’s influence on the group also stems from his record as president of Tata Sons between 1991 and 2012. A legendary figure in Indian affairs, he put the Tata group on the world map with a series catchy chords. over the past two decades, from the $ 2.3 billion purchase of automaker JLR to the $ 13 billion acquisition of UK steel company Corus Group Plc.
(Updates with the company’s stock prices in the fifth paragraph)
–With help from PR Sanjai.
(Except for the title, this story was not edited by NDTV staff and is posted from a syndicated feed.)