Consensus grows on internal Tata successor

The race to succeed Ratan Tata has boiled down to two-three candidates out of 11 initially shortlisted by the search panel

The search for the next occupant of the corner office at Bombay House, the Tata Group’s imposing headquarters, has narrowed down to two or three candidates. Sources familiar with the developments say the growing consensus in the committee set up to find a successor to chairman Ratan Tata is that an internal candidate should be the preferred option.

The search committee had earlier shortlisted 11 candidates, of which four-five were existing employees. Ratan Tata will step down in December next year after he turns 75. If the group comes up with a successor by December, the candidate will get a year to work closely with Tata.

Sources say Tata’s step-brother, Noel Tata, now heading Tata International, is clearly one of the candidates. This is despite Ratan Tata’s statement in an interview to a foreign publication a couple of months ago that he did not think Noel was ready for the role.

The others in consideration include a couple of members of the group’s executive office, which reviews the businesses of all group companies, as well as the group corporate centre, which monitors all policy-related issues. It also promotes the Tata brand and provides advisory services to group companies in human resources, finance and legal affairs.

Those in the know say a growing opinion is that a rank outsider may be a misfit as he would need time to settle and fit into the unique culture of the 100-year-old group. According to people in the know, the feedback from employees has been supportive of Noel Tata at the helm.

The search panel has N A Soonawala, former vice-chairman of Tata Sons, R K Krishna Kumar, non-executive director, Tata Sons, Cyrus Mistry, the youngest son of construction magnate Pallonji Mistry (the largest single shareholder in Tata Sons), Lord Kumar Bhattacharya, a businessman based in the UK who runs Warwick Manufacturing, and Shirin Bharucha, a lawyer for the group.

When contacted, a Tata Sons spokesperson said the selection committee’s work was in progress and it would not like to comment on any speculative report on the issue.

The spokesperson said the committee had interviewed both internal and external candidates. “It would be premature to share any details of the progress of its endeavours except to state that the committee is fully aware of the relevant timeline.”

Those watching the developments say questions could be raised whether Noel had the requisite experience and whether he would need a longer hand-holding period. In case he did, Ratan Tata would need to stay on beyond December 2012. But, that is highly unlikely.

Apart from Ratan Tata, the executive office comprises R Gopalakrishnan, (65), Ishaat Hussain (63), Kishor Chaukar (64) and Arunkumar Gandhi (68). The group corporate centre comprises J J Irani, R K Krishna Kumar, R Gopalakrishnan, Ishaat Hussain, Kishor Chaukar and Arunkumar Gandhi, besides Tata himself.

Just a few months ago, the committee suggested lowering the retirement age of non-executive directors from 75 to 70. That would not apply to non-executive directors already 70 or above, including Krishna Kumar and J J Irani. The proposal has been accepted by the board of Tata Sons. This means some key players in the group, including Tata Steel vice-chairman B Muthuraman, Tata Motors vice-chairman Ravi Kant and Tata Consultancy Services vice-chairman Ramadorai, will retire within the next four-five years.

The group has brought in people in their 40s and 50s to run some key companies. They include Tata Power MD Anil Sardana, TCS MD Natarajan Chandrasekaran, Tata Chemicals MD R Mukundan, Tata Teleservices MD N Srinath, Indian Hotels MD Raymond Bickson and Tata Motors MD Carl-Peter Forster.