Tata Sons may split chairman's power

Harish Manwani may be among the candidates in race for the top job

Tata Sons, the unlisted holding company of the Tata group, is looking at restructuring the chairman’s position and role. In a departure from the current practice, the new Tata Sons chairman may not head the boards of the group companies, it is learnt. It is possible that the chairmanship of the Tata group companies may be distributed so that there is no one power centre.            

Separate chairmen for each operating company would mean going back to JRD Tata’s days when professionals chaired group firms. Ratan Tata changed the policy, after which he became the chairmen of operating companies also, after becoming the Tata Sons chairman.  

While N Chandrasekaran, CEO and MD of Tata Consultancy Services (TCS), continues to lead the race for the top job at Tata Sons, the buzz is that Harish Manwani, former chief operating officer of London-based multinational Unilever, is in the fray too for the chairman’s position. UK's Sky News reported on Thursday that Manwani, 62, was offered the job. Manwani, who is currently based in Singapore, reportedly had a meeting with Tata recently.

Sources said that Manwani’s connect with the Tata group is not new. A few years ago, he was sounded for a board position at Tata Sons but it could not materialise, it is learnt.    

Besides the possibility of chairmanship of Tata companies being distributed, the group is looking at another option. That is, it may appoint a non-executive chairman and create a separate managing director’s position, in order to split the powers of the executive chairman.

The proposal to restructure the chairman’s position is likely to be taken up by the Tata Sons board early 2017 once the extraordinary general meetings of the shareholders seeking to remove Cyrus Mistry as a director in group companies is over before by Christmas, a source said.

When contacted, a Tata group spokesperson declined to comment.

If the chairman’s position is split, the new structure would allow freedom to operating companies to chart their own course, a source said.

In an announcement on October 24, when Mistry was removed as Tata Sons chairman, a selection panel was constituted to select a new chairman. It was given four months, which means a chairman should be announced by end of February.

Since Mistry’s surprise ouster, the Tata Sons board has inducted two new directors, Chandrasekaran and Ralf Speth, CEO of Jaguar Land Rover on its board. The 12-member Tata Sons board had inducted Amit Chandra, Ajay Piramal and Venu Srinivasan as independent directors in August this year.

Mistry is currently a director on the board of Tata Sons and insiders said an extraordinary general meeting of Tata Sons’ shareholders would be called in January next year to remove him from the Tata Sons board as well. The Mistry family owns 18.5 per cent stake in Tata Sons while the rest is owned by Tata Trusts, Tata group companies and by small shareholders.

Meanwhile, Nusli Wadia, is expected to sue Tata Sons and its directors on the special notice sent by Tata Steel, Tata Chemicals and Tata Motors for defamation by next week. With this, a legal battle between Wadia and Tata Sons is now almost certain.

The Tata Sons board has asked its group companies to remove both Mistry and Wadia from their boards.