From a group run by satraps, the outgoing chairman of Tata group, Ratan Tata, will be credited with building a young team of CEOs to run their respective companies, giving them a free hand as long as they followed the basic principles of ethics, values and corporate governance. Tata hired the best talent from across the world as he saw early on that to survive in the wake of economic liberalisation, Indian companies needed to go global and adopt best practices.
Backed by a trusted Team A, led by fellow Tata Sons director R K Krishna Kumar, Tata led the transformation by selling unrelated businesses such as cosmetics, soaps and cement - angering many satraps close to predecessor J R D Tata. The group instead focused on a new generation businesses such as telecom, software, retail and cars.
Tata built a network of young CEOs, now in their 40s and running their respective companies efficiently. This includes Karl Slym, hired from General Motors to run Tata Motors after Nano failed to make money. Not to forget other performers such as Brotin Banerjee, 36, who heads Tata Housing Development Company; N Chandrasekharan, 48, CEO of TCS; Anil Sardana, 52, of Tata Power; N Srinath, 49, of Tata Teleservices, and R Mukundan, 44, CEO of Tata Chemicals.
Although Tata faced a tough time in his career, thanks to the public fight with Russi Mody and Ajit Kerkar, he managed to ease out the satraps and succeeded in getting his own people at the helm of every company.
According to Tata Group insiders, it was Kumar who was instrumental in setting up the succession committee for Tata and helped set the retirement age of Tata directors to prevent any Russi Mody episode in future. When Ratan Tata was under siege from Mody, the then chairman of Tata Steel and Kerkar, the then chairman of Indian Hotels, the operators of Taj hotels, and Darbari Seth of Tata Chemicals, it was Kumar who played an important role in the ouster of the satraps.
Since then, Tata and Kumar have led the transformation of the group from a bureaucratic setup to a nimble-footed group, which is now earning half of its $100-billion revenues from its overseas operations. In a recent interview with Business Standard, Kumar said the aggressive mergers and acquisitions policy of the group is now finally giving dividend. "Just look at the JLR; we are now earning every quarter what we spent on buying the company," he said. In 2012, JLR made a profit of Rs 12,900 crore on a revenue of about Rs 1.16 lakh crore.
In Tata Chemicals, R Mukundan is steering the company towards speciality chemicals and consumer products, as consumer demand change along with rising consumption. "As India becomes more urbanised and as income levels and habits change, the country's GDP will rise and supply chains will shift; there will be demand for new types of chemicals and products," says Mukundan. As Tata Steel Managing Director H M Nerurkar is due to retire early next year, insiders say a search is already on for the next managing director. Among the front runners is 44-year old Kaushik Chatterjee, the CFO of Tata Steel, who helped the company restructure its debt taken to fund its acquisition abroad of Corus.
As Kumar is also retiring from Tata Sons and group companies by July next year, Tata's new chairman Cyrus Mistry will be starting his innings with a clean slate. This will help the new chairman to build his own team. With Tata promising every help to his successor, it will be now up to Mistry to take the Tata Group to the next level.