TCS boss N Chandrasekaran is the new Tata Sons Chairman

MUMBAI: Natarajan Chandrasekaran, the chief executive officer of India’s largest software exporter Tata Consultancy Services, was on Thursday anointed chairman of Tata Sons, the holding company of India’s largest conglomerate by revenues.

The Tata Sons board met on Thursday at Bombay House, the headquarters of the Tata Group, and unanimously endorsed the appointment after a search panel recommended Tata lifer Chandrasekaran, 53, usually referred to as Chandra.

Chandra, a computer engineer who joined TCS in 1987 and became its CEO in 2009, received a standing ovation from his employees after he returned to TCS House in Fort. He is the first professional to head the salt-to-software business house and will take over from interim chairman Ratan Tata on February 21. Rajesh Gopinath will replace him at TCS.

Economictimes.com, the online edition of this newspaper, was the first to report, around 3:45 pm, that the Tata Sons board was meeting at 4 pm to select a new chairman. The newsbreak overshadowed the TCS results, which were being announced at the time.

“Chandrasekaran has demonstrated exemplary leadership as the chief executive officer and managing director of TCS. We believe he will now inspire the entire Tata Group to realise its potential, acting as leaders in their respective businesses, always in keeping with our value system and ethics and adhering with the practices of the Tata Group which have stood it in good stead,” Tata Sons said in a statement.

“I will grow into the role over a period of time. It is a responsibility which requires binding the group together. I want to show my gratitude to the board and RNT,” Chandrasekaran, ET’s Business Leader of the Year for 2016, told reporters on Thursday evening.

A spokesperson for Cyrus Mistry, whose ouster as chairman on October 24 set off the chain of events culminating in Thursday’s appointment, declined to comment on the development.

“It was a unanimous decision,” said a person who is familiar with the selection process. “Although it (the search) was done within 2 months, we had to look at quite a few domestic and international candidates.”

Also Read: How digital warrior from within outran competition to be Tata Sons Chairman

The appointment of Chandra, a regular marathoner, is seen as the group’s preference to hand over the reins to an insider who understands the Tata Group culture and values. The new Tata Sons boss, who is also an avid photographer, was inducted on its board on October 25, the day after Mistry was sacked.

Some people aware of the succession process said there were not many candidates who could fit the bill and Chandra was the odds-on favourite. “To be honest, there were not too many competitors for Chandra,” said a senior Tata director. “It was a foregone conclusion…the search panel merely let the official search period come to a reasonable close.”

“We needed someone who was aware of the Tata culture, experienced and familiar with the working of the group,” the first person quoted above said. After Mistry’s ouster, Tata Sons had said a new chairman would be chosen in four months or less.

Tata Sons, after sacking Mistry, had formed a 5-member selection panel to shortlist the candidates for the top job. The panel included TVS Chairman Venu Srinivasan, Bain Capital’s Amit Chandra, former diplomat Ronen Sen and Kumar Bhattacharyya of Warwick University.

All of them, except Bhattacharyya, are on the board of Tata Sons. Mistry was sacked after he lost the confidence of the board and was replaced by his predecessor Ratan Tata, who became interim chairman. Ishaat Hussain, Tata Sons board member, said: “Chandra knows the group very well. I think the house is always for the shareholders. My personal view is that shareholders will like Chandra.”

CHALLENGES
Academicians say Chandra, a music aficionado, will have to face huge challenges in running the conglomerate. “The challenges in front of Chandra are huge. For the first time, he will be responsible for a diversified conglomerate as he has always been a TCS man…now he has to look after salt, steel, telecom and other areas,” says Kavil Ramachandran, executive director of the Thomas Schmidheiny Centre for Family Enterprise at ISB.

“He has to define what he wants to be — a leader, champion or a facilitator. He has to take some urgent decisions since the group’s image has taken a massive beating in the last few months and there is a battle brewing with the former chairman (Mistry). There will be high expectations from all stakeholders,” he added. Mistry, who ran the group from December 2012 till October 2016, is now fighting a legal battle with the group at the National Company Law Tribunal.

He has alleged oppression of minority interests and other corporate governance issues at Tata Trusts, which owns two-thirds in the holding company. Mistry along with his family owns 18.3% stake in Tata Sons.

Industry captains hailed the choice. “Chandra is a great choice. I have known him and worked with him closely,” Sunil Bharti Mittal said. “N Chandrasekaran’s elevation as Tata Sons chairman is an outstanding choice,” says Anil D Ambani, chairman, Reliance Group. “Chandra, as he is fondly referred to, brings to the table an unparalleled track record of value creation and visionary leadership at TCS, the Kohinoor in the Tata crown.”

Some Indian lenders are betting on Chandra’s global experience.