New Tata boss must restore reputation

When Natarajan Chandrasekaran takes charge at Bombay House as the first non-Parsi chairman of Tata Sons, he would have a job cut out for him. The job at hand is rather difficult, though not impossible for a person of his calibre and goodwill to achieve. The first and foremost, Chandra, as he is known among his friends and colleagues, has to restore reputation of the Tata Group which has a market capitalisation of $116 billion, of which 60% is contributed by the Tata Consultancy Services, so well nurtured by the man of the moment himself. The unceremonious exit of Cyrus Mistry in October was followed by battles less inside the board rooms and more in full public view, finally landing in court rooms and the National Company Law Tribunal. Whether Mistry’s ouster was in conformity with the law or whether the Parsi kin of the principal group promoter Ratan Tata had really proved to be incompetent to preside over such a diverse and complicated conglomerate is for the courts to decide.

While Chandra has been hailed by one and all as the most suitable and home-grown candidate to preside over Tata Sons which controls all the operating companies like TCS, Tata Motors, Tata Steel, Tata Power among others, no clear signal has emanated yet from Mistry about his take on the new Tata boss. Chandra enjoys a good chemistry with Ratan Tata but he would have definitely built a working relationship with the ousted Tata Sons chairman as TCS head. He could certainly reach out to the Shapoorji Pallonji family of Mistry, the second largest shareholders in Tata Sons, for a truce that would enable him to focus on the business challenges which lie ahead of the group.

Excepting TCS, most other Tata group flagship firms operate in businesses which got severely impacted by downturn in global commodity cycle. Some of the operations might even need closure or scaling down and this is some thing that must be decided purely on consideration of business viability and value creation for all the shareholders and not because of passions or emotions of the principal promoter. This is where, Chandra has to show his independence, taking valuable inputs from the independent directors on different Tata boards. In any case, a lot more needs to be fixed on corporate governance which came under a shadow following Mistry’s ouster. The new Tata boss must re-build a perception about the group and re-create shareholders’ value lost in the past several weeks, leveraging the goodwill he enjoys among the stakeholders, including lakhs of Tata employees.

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