“A safe pair of hands”. That’s how Tata Group veterans describe Natarajan Chandrasekaran, who has just been reappointed for a second five-year term as chairman of Tata Sons, the holding company steering the ₹23 trillion market cap salt-to-software conglomerate.
Safety was the paramount driver behind Chandrasekaran’s initial appointment as the first non-Tata family member to head the sprawling, 100-company group. His appointment had just followed the messy and headline-grabbing ouster of Cyrus Mistry as chairman, after a long and bitter boardroom and court battle which saw much washing of dirty Tata linen in public. At the time that he took over as head of Tata Sons, Chandra – as he is universally known – had been arguably the most successful chief executive within the group, having transformed Tata Consultancy Services (TCS) into the world’s 68th most valuable company by market capitalization, and far and away the biggest and most valuable IT services company in India.
TCS was also the main group company which was contributing to Tata Sons’ coffers. The group’s large manufacturing enterprises – Tata Steel, Tata Chemicals and Tata Motors – where struggling under a mountain of debt. Other than Titan, its consumer-facing businesses were struggling. The foray into mobile telephony had proved a disaster, Tata Motors had been reduced to a largely taxi brand in the domestic market, the ‘world’s cheapest car’ – the Nano – had flopped and its retail forays were being strongly countered by global e-commerce giants as well as deep-pocketed local competitors like Reliance. And its aviation forays – Air Asia India and Vistara — were stuck with low market share and also, in the case of Air Asia India, mired in controversies over alleged mismanagement and worse.
And, there was Ratan Tata. Mistry’s appointment had blown up primarily because of irreconcilable differences between RNT – as the Tata Group patriarch is referred to in Tata circles – and Mistry. Mistry’s impatient attempts to bring about change at Bombay House, starting with a complete revamp of the core team, had left the old guard seething. And communications with Ratan Tata had broken down. Mistry’s exit may have come as a surprise to outsiders but for months prior, insiders had been speculating on his exit.
As chairman emeritus, RNT continued to take a much more active interest in the group’s activities – and decisions – than the title would suggest. Regardless of who stepped into Mistry’s shoes, one thing was clear – he had to enjoy RNT’s trust and backing.
Chandra ticked all the boxes. His reconstruction of the group has been deft, with major management changes being accomplished without fuss or controversy. The ‘old guard’ did not feel slighted or ousted. And Chandra has ensured that projects close to Ratan Tata’s heart – such as the re-acquisition of Air India into the Tata fold – were executed with speed and vigour.
He has also transformed the group’s finances. In the first four years of his term, listed Tata companies added ₹8.6 trillion in market capitalization. Today, the 20 listed Tata entities are worth more than the 70 listed public sector undertakings combined. True, Tata Steel, Tata Motors et al continue to be extremely leveraged – but the bottomline bleeding has been stemmed.
Chandra’s reappointment underlines the safety play at Tata Group. His new strategy for the group, focusing on four major themes – digital, new energy (including electric mobility), supply chain resilience and health – were in early stages of implementation. After dithering for years, the group has also just plunged into e-commerce with a new retail ‘super app’ plan. And, the acquisition of Air India, which Chandra has termed the group’s ‘most import milestone’ – is less than a fortnight old.
Then there is covid. Despite appearances, the pandemic is by no means over. Businesses continue to be not only deeply affected by covid, but have had to reinvent work and manufacturing practices, supply chain logistics and operations literally on the fly. A shake-up at the top at this juncture might have derailed these efforts. The safety play won again.
Then, like Narendra Modi, there is the TINA factor. At the moment, Chandra is head and shoulders above any potential competition – either within the group or without, either on the performance front or the RNT factor. A potential successor from within the Tata family – Noel Tata, RNT’s half-brother has often figured in media speculation – is clearly some time away.
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