Tata companies will lead, not follow: N Chandrasekaran

Statement by Chandra assumes significance to take the boards of Tata group companies into confidence

Soon after attending his first board meeting as chairman of Tata Sons, N Chandrasekaran on Tuesday vowed to make the Tata companies leaders in their respective sectors, offer higher returns to shareholders and initiate a better capital allocation policy.

“In my new role, I will focus on three strategic priorities: bring the group closer together to leverage its enormous collective strength; reinforce a leader’s mindset among the operating companies and drive world-class operating performances across the group; bring greater rigour to our capital allocation policies and deliver superior returns to our shareholders. I look forward to working with my colleagues, the management teams and the boards of the companies towards achieving these goals,” said Chandra, who walked into Bombay House, the iconic headquarters of the Tata group, just before the Tata Sons board meeting, wearing a red tie and a suit.

The statement by Chandra assumes significance as it shows the new chairman’s willingness to take the boards of the Tata group companies into confidence.  During Cyrus Mistry’s battle with Ratan Tata, many independent directors of group companies had openly supported Mistry, splitting the boards into two camps.

Chandra said it was an honour to lead the Tata group near its 150th anniversary. "The Tata group occupies a unique place in the hearts and minds of millions of Indians and also has established an important presence around the world,” Chandra, the first non-Parsi chairman of the group, said.

In a letter to Tata employees, Chandra said, “As a group, we have enormous collective strengths. Working together, our companies, Tata Sons and the Tata Trusts have been very successful in the past, and have created great value for all our stakeholders. Now, as we face the future, we have a huge opportunity to do so once again — in terms of our business performance, by enabling higher shareholder value, as well as by making a significant and lasting social impact with a view to make a sustainable difference in communities.

This was in an apparent attempt to win the confidence of the Tata Trusts, which had a testy relationship with Mistry. The Tata Trusts own 66 per cent of  Tata Sons and have veto powers to sack and appoint the chairman. Ratan Tata is the chairman of the Tata Trusts.

“This can only be achieved with a relentless focus on the customer, by gaining a deeper understanding of their aspirations, and by designing our products and services to meet their needs. In today’s context, where technology is playing a key role in business success, the need for innovation is vital to help reimagine and reinvent our businesses for the future,” Chandra said.

Chandra appointment follows Mistry’s ouster in a boardroom coup as Tata Sons chairman in October. Mistry later said the group was facing potential write-downs of $18 billion due to wrong business decisions taken by his predecessor Ratan Tata.

Felicitating Chandra, Ratan Tata said, “I welcome Chandra, who has successfully displayed his leadership in his career at Tata Consultancy Services. I am sure he will bring considerable value to his leadership role in the Tata group in the years ahead.” Since October 24, the Tata group companies have lost market value worth Rs 11,052 crore, or 1.3 per cent, against a three per cent gain by the BSE Sensex.