The successor to Mr. Tata, Cyrus P. Mistry, will take over as chairman in December 2012 after serving as deputy chairman for a year, instantly catapulting him from a relatively little-known executive to the head of a sprawling global empire. Tata Sons, based in Mumbai, is the holding company for an $83.3 billion group that includes companies engaged in industries including software, cars, steel and the Taj hotel chain.
Mr. Mistry is a member of the committee that had been searching for Mr. Tata’s successor and a member of the board of Tata Sons, which is not listed on the stock exchange, though many of its subsidiaries are.
In addition, Mr. Mistry is the managing director of Shapoorji Pallonji Group, a real estate and construction business that owns about 18 percent of Tata Sons, more than any other noninstitutional investor. About two-thirds of Tata Sons is owned by charitable trusts established by the Tata family. Mr. Mistry, 43, has said that he will step down from his position at Shapoorji to avoid any conflict of interest.
A spokesman for Tata Sons, Debasis Ray, said Mr. Mistry recused himself from the selection committee’s consideration of candidates once the four other members suggested him as a candidate for the job. Mr. Ray said he did not know when that suggestion was made. He said the committee, which was constituted in August 2010, met 18 times and considered candidates from within the group and outside.
Mr. Tata is often credited with reviving ailing businesses and turning Tata Sons into a global company by investing in software outsourcing and by acquiring foreign companies like Tetley, Jaguar Land Rover and Corus. He has been at the helm of the group since 1991.
Other potential candidates had included Indra Nooyi, an Indian native who heads PepsiCo in the United States; Arun Sarin, the former top executive of Vodafone of Britain; and Noel N. Tata, a stepbrother of Mr. Tata’s and an executive at the group.
One senior executive at the group, speaking on the condition of anonymity because he is not authorized to discuss the search, said the appointment might signal that Shapoorji Pallonji, which had long appeared to be a silent investor in Tata, now wanted to take a more prominent role in the operations of the group. “We have somebody with a large equity stake in Tata Sons exercising his stake,” this executive said.
This executive and others said it was not surprising that the committee picked Mr. Mistry, who is not widely known even among close watchers of corporate India. He has a good relationship with Mr. Tata, which was always seen as an important qualification for the job, given the respect he commands within the group and across Indian business and political life. Moreover, Mr. Tata is expected to remain chairman for a transition year.
“You would be surprised how quickly those things can be acquired,” the Tata executive said about a high public profile in India and the world.
Alan Rosling, who once served on the Tata Sons board with Mr. Mistry, called the appointment a “wise choice,” adding, “He grasps issues very fast.” Mr. Rosling is now chairman of Kiran Energy, an Indian solar power producer. “He has, I think, significant character,” he said of Mr. Mistry. “I have seen him argue for something he believes in and that may not be the mood of the house, as it were.”
The Tata and Shapoorji Pallonji businesses were both founded by family members who are Parsi. The Parsis are an ethnic group that traces its heritage to modern-day Iran but has been in India for centuries. The families that founded the two business groups are related to each other through marriages between their descendants.
Gurcharan Das, an author and former head of Procter Gamble’s Indian business, said many in corporate India had hoped that the selection committee would appoint a professional who was not necessarily a member of one of the families associated with the companies.
“One would truly have liked to have an outstanding professional, that would have been an ideal scenario,” he said. “And they did a search that raised all of our expectations.”
This article has been revised to reflect the following correction:
Correction: November 23, 2011
An earlier version of this article incorrectly said Noel N. Tata is Ratan N. Tata’s cousin, rather than his step-brother.
Article source: http://www.nytimes.com/2011/11/24/business/global/tata-empire-picks-successor-to-longtime-leader.html?partner=rss&emc=rss
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