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What it takes to be Ratan Tata?

Last updated on: October 25, 2011 15:06 IST

What it takes to be Ratan Tata?

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Ratan Tata Reuters

Those in charge of the search for a suitable successor to Ratan Tata, who heads the group that bears his name, seem to be sweating for a solution. Reports have suggested that Indira Nooyi of PepsiCo was offered the job, but declined.

Other names have been mentioned in unconfirmed reports, like Arun Sarin, the former boss of Vodafone.

With none of them either found suitable or willing, the default position voiced some time ago by one member of the search committee was that no one person fits the bill.

This is only to be expected, given the enormous stature that Mr Tata has acquired during his leadership of the group over nearly two decades.

So if the committee is now obliged to look for second-best solutions, should it suggest splitting the job?

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Business Standard reported on Tuesday that the group holding company, Tata Sons, may be given a CEO, separate from the chairman.

This may be entirely desirable for Tata Sons, but being the CEO of the holding company is not the same thing as being the group chieftain. So the primary question remains: who will fill Mr Tata's big shoes?

In the absence of suitable external candidates, solutions have necessarily to be found in-house. The experience with the last succession, when Ratan Tata succeeded JRD Tata in the early 1990s, is instructive.

Many thought that the chosen person had an inadequate track record, and there was stubborn opposition from group satraps.

However, JRD stood by Ratan Tata through the initial battles, and if he were alive today he would have found his choice amply vindicated.

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Image: Naval Tata, Ratan Tata and Noel Tata (in the centre)
Photographs: Courtesy, Outlook Business
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Against that backdrop, when one considers today's options, the most likely candidate has to be Noel Tata.

His name was discounted some time ago after Ratan Tata made the obvious point that he did not have the required business experience.

That is true, of course. Until fairly recently, Noel Tata's role was essentially confined to running Trent, the retailing company. He now has a somewhat broader profile, but still no role in any of the group's large operating businesses.

Yet, the younger Tata (half-brother to the group chairman) has the qualities that would make for a good chairman in a group that has a complex structure and a unique ethos-which is why he would enjoy broad internal acceptance.

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Image: Noel Tata

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In addition, he is graced with the Tata name and would have the support of the Shapoorji Pallonji family, to which his wife belongs and which is the largest external shareholder in Tata Sons.

The task before the senior Mr Tata would then be to give the younger Mr Tata a direct experience of more businesses, through a broader group role - as the former himself was given after he spent his initial years running Empress Mills and Nelco.

Mr Ratan Tata was inducted onto the boards of the major group companies, one by one, after he was made chairman of Tata Industries, so that by the time he took over as head of the group, he had a good handle on its major businesses.

Today, if a CEO is to be appointed to Tata Sons, why not Noel Tata? Ratan Tata (who has more than a year to go before retirement) could then groom him for the eventual succession, even if that process takes a few years.



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