Tata Sons appoints three members for new executive group

Emphasis on youth to target next generation

By R Chandrasekaran

The $100 billion Tata group’s holding company Tata Sons chairman Cyrus Mistry, who took the reins four months ago, is appointing young blood to the group executive council for strategic and operational direction in an effort to take the group to the next level of growth phase probably aimed at the next generation.

The new group executive council or GEC headed by Mistry will replace the group corporate center or GCC and the group executive office or GEO and assume the roles played by the two groups. In the early 2000s, Ratan Tata had set up GCC as a policy making body for a strategic direction of the group. It was headed by Ratan himself and joined by J.J. Irani, R.K. Krishna Kumar and N.A. Soonawala as members.

Tata Sons has only named three members for the newly formed GEC and more names will be disclosed later. While N.S. Rajan, who is with Ernst & Young, will take care of the strategic human resources function, Mukund Govind Rajan, currently with Tata Sons only, will handle brand, communication, corporate social responsibilities and ethics. Madhu Kannan, also from Tata Sons, is being entrusted with the responsibility of heading business development and public affairs.

Except N.S. Rajan, who is aged 51, others are in their 40s only. This includes Cyrus too. The average age of the current three-member GEC is only around 45 suggesting a potential longer tenure for the members. Given the fact that N.S. Rajan is from outside, there can be every possibility that other members to be appointed can also come from the outside.

The appointment of three-member GEC also indicates the importance of youth that can take the group to the next level of growth phase. The company said in a statement that “The agenda of the GEC includes, inter alia, return on investment with a long-term perspective; support for and shaping of the agenda for philanthropy; preserving and enhancing the reputation of the Tata name; defining and driving a Tata way of working for group companies; and playing a proactive role so that the group fulfils its responsibility as a global corporate citizen.”

The mandate is quite clear: create long-term value to all stake holders through a well-crafted plan and execution. For this, the GEC could work in tandem with various group companies’ executive managements.

The current situation for Cyrus is different from what Ratan Tata had faced two decades ago. When Ratan took the reins of the group, the government also started its economic liberalization policy after a long period of controlled regime. He had twin objectives, one was to manage the common wealth of companies since the companies were slightly fragmented, and the other was to take advantage of the liberalization policy to expand its foot. In some of the companies, Tata’s holdings were precariously low with a potential takeover threat. However, the situation has changed now. There cannot be any doubt that Ratan had delivered significant return to the shareholders during his time.

In the case of Mistry, it is not only about consolidating its presence in various sectors, but also extend and expand in other avenues to take advantage of policy reforms. For this, he took a calculated move to appoint members of his age group to accelerate the next phase of growth. The current move is aimed at projecting itself as an aggressive player in the market place similar to earlier era that could take the Group to other non-existent space. For instance, the Group has recently entered the airline space through Air Asia, which eluded Ratan Tata for different reasons. There are other sectors like Defense where the group can enter and take a strong position.

To contact the author, e-mail: rchandrasekaran@americanbazaaronline.com