In a sea of black suits, Cyrus Mistry stood out in more ways than one. Mistry stepped into Bombay House for the first time as the deputy chairman of Tata Sons on Thursday, with his shirt sleeves rolled up and a few top buttons undone.
Though it’s still a year before he takes over the top job, there are already murmurs within the Tata corporate headquarters that young turks within the group are now poised for much bigger roles and responsibilities — in individual operating companies and even at Tata Sons.
Nobody yet has a clear answer to many of these leadership-related questions, but many say some of the current heads of group companies like Tata Investments’ Noel Tata, Tata Steel’s H M Nerurkar, Tata Power’s Anil Sardana, Tata Consultancy Services’ N Chandrasekaran, Tata Teleservices’ N Srinath and Tata Motors’ P M Telang or even JLR’s Ralph Speth would play larger roles within the group.
This is contrary to the long-drawn speculation that four vacancies on the Tata Sons board will soon be filled by four far more senior executives — B Muthuraman of Tata Steel, Ravi Kant of Tata Motors, S Ramadorai of TCS and Prasad Menon, formerly with Tata Chemicals and then Tata Power.
Except the recently retired Menon, the other three are vice-chairmen of the respective group flagships and have recently stepped down from executive positions. They were expected to slip into the boots of former directors who retired over the last few years, like vice-chairman Noshir Soonawala, J J Irani, the ex-MD of Tata Steel, Shyamal Gupta, the former chairman of Tata Exports, and Alan Rosling, who represented Jardine Matheson, a Hong Kong-based company with a stake in Tata Industries, bought out by Tata Sons a few years ago.
More From This Section
Currently, there are seven wise men presiding over Tata Sons. Over the next two years, two more seats are likely to get vacated when Arun Kumar Gandhi and Farrokh Kavarana are due to retire.
Incidentally, before on Thursday, Cyrus, the youngest son of Pallonji Mistry (the largest individual shareholder of Tata Sons), was the last inductee in the Tata Sons board in 2006.
But, as the countdown for December 2012 (when Ratan Tata will retire from the top job) has begun, people are asking whether this is the beginning of sweeping reforms and whether new faces would jostle for space and board seats across the group.
Mistry’s job would become easier, as in the recent past, younger CEOs have taken over a number of Tata companies, including TCS, Tata Teleservices, Tata Power, Tata Chemicals and Tata Realty.
However, the boards of group companies reflect a very different picture. Mistry is the only director in Tata Sons who is below 50. All others are at least a decade older.
The top five companies in the group have about 50 directors on their boards, about 70 per cent of whom are over 60 years. Below 50, there are just about five professionals. Insiders say Mistry, as a Tata Sons board member, has been a constant votary of inducting fresh talent across the group.
“I don’t want to speculate about names. But churning is part of evolution. It took place even when JRD gave way to Ratan Tata, who in turn got people his age. It wasn’t always pleasant then. The same may happen with Cyrus who may want to bring in a crowd closer to his age group,” feels Arun Maira, a member of the Planning Commission who worked closely with the group in his earlier avatar as the India head of Boston Consulting. The age of the senior leadership has always been a sensitive issue in the Tata Group. In a surprise move earlier in the year, the Tatas suddenly lowered the retirement age for non-executive directors on the boards of 90 group companies to 70 years from 75. This move -- mooted by the same selection panel that was mandated to choose Ratan Tata’s successor -- was meant to give the new leader freedom to choose his own advisers.
Even though nobody would publicly admit, group watchers said this irked many in the higher echelons as all of a sudden many faced the prospect of a shortened career.
Muthuraman, Ramodorai, Menon and Kant are all in the 65-67 age group. Tata Sons members R Gopalakrishnan and Ishaat Hussain are 66 and 64, respectively.
However, non-executive directors who have already crossed 70 years will stay on and retire at 75 — in line with the old rule laid down in 2005. Therefore, Ratan Tata’s most trusted lieutenant, R Krishnakumar (72), will continue on the board of Tata Sons and other group companies.
“This decision was undertaken by the selection committee. Mind you, this was an add-on to the original mandate as people felt the board structure should also be streamlined with the new successor. The Tata Sons board ratified it. Clearly, the message is bring in younger people and also let the new guy decide his team,” says a group watcher who did not want to be identified. He added, “Also, this is a group which has witnessed Ratan Tata in acrimonious turf battles with the earlier satraps. So, why would anybody take a chance yet again?”
“Cyrus was chosen for the continuity that he brings to the table. Then I'm guessing, he would also want the Tata Sons board members to have potentially long stints, just like him. Many current members have had long stints, too. It’s important as Tata Sons is the strategic think tank for the group and provides long-term direction,” said another group source on the condition of anonymity.
Therefore, many feel it may be unlikely the four vice-chairmen would come on the Tata Sons board at this juncture, only to retire over the next three-five years. “They can be enagaged elsewhere, and still continue to give strategic inputs,” another source pointed out.
It’s not that seniors will not have any role once Mistry takes over. “R Krishnakumar will be around in Tata Sons for the next three years. Gopalakrishnan and Hussain will also be there for some time. They are all very competent people and can guide Cyrus. Grooming is critical,” says R M Lala, an old-time group chronicler and former director of the Dorabji Tata Trust.
(Additional reporting by Shivani Shinde in Mumbai and Ishita Ayan Dutt in Kolkata)