New chairman to begin journey to resurrect Tata’s image

Bloomberg

Amid the carnage on Wall Street in 2008, as Bank of America Corp. was trying to forge its rushed merger with Merrill Lynch & Co., Natarajan
Chandrasekaran boarded a plane for New York to try to reassure the two financial behemoths that an Indian IT company could make the systems of their strikingly different cultures work together.
Chandrasekaran, known as Chandra, was then chief operating officer of Asia’s largest IT services exporter, Tata Consultancy Services Ltd. Over the following weeks he fended off global rivals who smelled an opportunity to muscle in, and set about integrating the banks’ systems and assuaging the new management’s anxieties about outsourcing to a foreign supplier. TCS kept the business and grew it substantially.
Last week, Chandra, now chief executive officer of TCS, was chosen for an even more fraught diplomatic task: to resurrect the image and fortunes of the Tata Group, India’s biggest conglomerate, which has been racked by losses at some of its biggest units, and by a boardroom battle that has threatened to turn the workings of the venerable corporation into a media soap-opera.
India’s Tata Sons, the group holding company, named Chandra, 53, as chairman, taking over on Feb. 21 from interim chairman Ratan Tata. Tata, 79, had run the family business for more than two decades before handing over in 2012 to his hand-picked successor, Cyrus Mistry. In October, Tata Sons shocked India’s corporate community by firing Mistry, reinstalling Ratan Tata and promising to find a replacement by March.
Chandra was a front runner for the job, a Tata employee almost all his working life, who grew TCS into the conglomerate’s most successful business, with about $16 billion in sales.
Yet he is both an insider and an outsider. While he has been with the group since joining as an intern three decades ago, he is the first chairman who is not a Parsi, the shrinking ethnic group of Zoroastrians that boasts a disproportionately high number of India’s business elite. He is only the third person without the Tata name to get the job, and the first without a close family tie to the Tatas.

IT CAREER
Moreover, his career and success has all been with TCS, virtually an island within the group that serves many of the world’s top corporations with a young, skilled, technical workforce. As head of Tata Sons, he will be responsible for a conglomerate that assembles buses in Zambia, serves prawn kalimiri to diners at its Bombay Brasserie in London, sells salt to Indian families at 18 rupees (27 cents) a kilo, and runs hundreds of other businesses across the world.
“He served both TCS and the customer commendably during the BofA-ML merger. Now he has the chance to build a positive organization by bonding together various companies and their half-a-million plus employees,” said S. Ramadorai, the previous CEO of TCS. “He is non-confrontational and, at the same time, does not foolishly ignore problems.”
Chandra’s appointment came after TCS announced it had made the equivalent of $1 billion in quarterly profit for the first time. Tata’s star unit accounts for over half of the group’s market value.
A five-man panel unanimously chose Chandra from a list of more than a dozen candidates. “He stood out both within the group and outside,” said former bureaucrat Vijay Singh, a non-executive director on the board of Tata Sons, which ratified the selection. A Tata Sons statement said Chandra would uphold the group’s values and adhere to its high standard of practices — things the board previously accused Mistry of failing to do.
“We are at an inflection point,” said Chandra in a statement after his appointment. “I am aware that this role comes with huge responsibilities. It will be my endeavor to help progress the group with the ethos, ethics and values that the Tata group has been built on.” Chandra declined an interview request for this story.

STEEL LOSSES
Facing him is a menu of corporate issues, including the money-losing UK operations of Tata Steel Ltd., the overhang from failed ambitions like Tata Motors Ltd.’s cheap Nano car, debt-ridden Indian Hotels Co., and a $1.17 billion arbitration battle with telecom partner NTT Docomo Inc.
Mistry has previously defended his time as chairman, when he tried to reduce debt built up during a series of global acquisitions by Ratan Tata. In an e-mail to directors after his dismissal, Mistry said the group may face 1.18 trillion rupees in writedowns over time because of “ legacy hotspots” he inherited.