(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
By Una Galani
HONG KONG Jan 13 (Reuters Breakingviews) - Tata has taken a
first step towards redemption after a demoralizing boardroom
brawl. IT whizz Natarajan Chandrasekaran will be the new
chairman of the $100 billion cars-to-salt conglomerate. He is
the closest thing to an outsider to hold the top job at the
group's holding company, Tata Sons. The appointment gives the
group a realistic shot at fixing thorny governance issues. He
can also help his own successor at key unit Tata Consultancy
Services in the event the United States cools on crucial work
Chandrasekaran signals both change and continuity. He does
not have significant investor relationship with the holding
company, whereas the family of ousted predecessor Cyrus Mistry
holds an 18 percent stake in Tata Sons. That stake is second
only to the charitable trusts led by group patriarch Ratan Tata
- the man who hired then effectively fired Mistry, setting off a
spat in which Mistry publicly railed against Tata management.
Chandrasekaran is also the first to hold the position who does
not hail from the tight-knit Mumbai Parsi community.
Yet he also knows the group intimately. He served as chief
executive of crown jewel Tata Consultancy since 2009, and sales
almost quadrupled under his watch. The software company is now
India's largest by market value. Given the boardroom spat, and
uncertainty over how much power a new chairman might really
wield given Ratan Tata's influence, it would have been tough to
find an outsider as respected as Chandrasekaran.
The new boss has a long to-do list to earn the market's
respect. He needs to credibly address the alleged governance
lapses outlined by Mistry. That may require resetting Tata Sons'
relationship with its investors, and revamping the board of the
holding company, which looks too cosy altogether.
He will also need to support his successor at Tata
Consultancy, where Chief Financial Officer Rajesh Gopinathan
will take the helm. The outsourcing firm is grappling with poor
top line growth and worries that U.S. worker visas could dry up
under the immigration-sceptic administration of Donald Trump.
The American market accounts for around 60 percent of revenues
for Indian outsourcers; leaving Gopinathan to sink or swim would
be inadvisable. Chandrasekaran is a decent choice at a difficult
time for the Indian giant.
On Twitter twitter.com/ugalani
- India's Tata conglomerate named Natarajan Chandrasekaran
as the new chairman of its holding company on Jan. 12.
- Chandrasekaran, 53, will take over as executive chairman
of Tata Sons on Feb. 21. He will step down from his position as
chief executive of IT outsourcing giant Tata Consultancy
Services, a position he has held since 2009.
- Tata Sons scheduled an extraordinary general meeting on
Feb. 6 to remove Cyrus Mistry as a director from the board.
Mistry is challenging that move; he was ousted as the chairman
of Tata Sons on Oct. 24.
- TCS Chief Financial Officer Rajesh Gopinathan will replace
Chandrasekaran as chief executive of the IT group.
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(Editing by Pete Sweeney and Nicolle Liu)