Business

TCS Chief Natarajan Chandrasekaran Appointed New Tata Sons Chairman

Chandrasekaran has been the chief executive of TCS since 2009 and was appointed as a director on the board of Tata Sons just days after Cyrus Mistry was removed as chairman of the group in late October.

Natarajan Chandrasekaran. Credit: PTI

Natarajan Chandrasekaran. Credit: PTI

Natarajan Chandrasekaran, the CEO and managing director of Tata Consultancy Services (TCS), was today named the chairman of Tata Sons, the holding company that controls the $100 billion Tata conglomerate.

Rajesh Gopinathan, who is currently the chief financial officer of the company, will replace him as the CEO of TCS, Financial Express reported.

According to a statement issued by the group, Chandrasekaran will take charge of the new role from February 21.

Chandrasekaran, 53, has been the chief executive of TCS since 2009. He was appointed as a director on the board of Tata Sons just days after Cyrus Mistry was removed as chairman of the group in October.

Tata Sons had on October 24 abruptly removed Mistry as its chairman and temporarily replaced him with Ratan Tata.

According to the Wall Street Journal, the unexpected move had surprised analysts and investors. The board of the group’s holding company, Tata Sons Ltd., said that the step was taken keeping in mind the “long-term interest” of the company.

The ouster of Mistry – who was chairman for almost four years and decided to skip the board meeting on Thursday – was followed by a bitter public spat between him and the group.

After his removal, Mistry wrote a letter to the Tata Sons board and the Tata Trust trustees, pointing out that he had been placed in the position of a “lame-duck chairman” and that when he first assumed charge in 2012 he “inherited a debt-laden enterprise saddled with losses”.

The letter singled out Tata Motors’ domestic and passenger-vehicle operators, Tata Steel’s failed European operations, Indian Hotels Co, Tata Power and Tata Docomo as “legacy hotspots”.

“I am not sure if individual board members and the trustees truly appreciated the extent of the problems I inherited. I cannot blame them, for I myself, as an non-executive director, did not have a clear grasp of the issues involved,” Mistry wrote.

In a public reply to its former chairman’s letter, Tata Group soon after confirmed that Mistry’s ouster was essentially over a clash of “culture” and “ethos,” adding that Mistry had “overwhelmingly” lost the support of board members over “a range of factors”.

Discussing Mistry’s hiring, the statement said Mistry’s explanation of how he would manage the Tata group sat well with the selection committee and they “failed to find an alternative candidate”. However, it continues, Mistry has not implemented any of the ideas he suggested to the committee, which had contributed to his hiring in the first place.

What Mistry did do, the statement alleges, is use the group’s public relations machinery to constantly emphasise the “supposedly good work being done by and under the new leadership”, pointing to what he called “legacy” issues or problems he had inherited to account for any trouble.

On November 15, Mistry was also voted out as chairman by the board of the Tata Global Beverages – the second listed firm of $103-billion group – and replaced with Harish Bhat, a non-executive director of the company.

In a short statement released after the TGB board’s decision, Mistry’s office declared that the decision to remove as chairman of TGB was a “repeat of the illegality” of his removal as chairman of Tata Sons in late October.

Tata Sons at the time also asked Tata Motors, Tata Steel, Tata Chemicals and Indian Hotels Co Ltd (IHCL) to call an extraordinary general meeting of shareholders to remove Mistry from its boards.

On December 12, Mistry was removed as the director of Tata Industries following shareholders’ vote following which he also ceased to be the chairman of the company.

Then a week later, in a surprise move Mistry announced his resignation from all the listed Tata Group Companies.

“It is time to shift gears, up the momentum and be more incisive in securing the best interests of the Tata group,” Mistry said in a letter to shareholders and board of Tata Sons.

Mistry, according to NDTV, had alleged breach of governance within the Tata Group, a charge that Tata Sons has denied saying it has followed the highest standards of corporate governance.

(With PTI inputs)