Challenges That Await New Tata Sons Chief N Chandrasekaran

From maintaining TCS’ performance to handling ex-chief Mistry’s allegations, Chandrasekaran has a lot on his plate.

N Chandrasekaran (Photo Courtesy: Reuters/Altered by The Quint)

Natarajan Chandrasekaran took over as the seventh chairman of Tata Sons Ltd on Tuesday. Before officially taking charge, he addressed reporters at the group’s headquarters Bombay House.

I am very proud of being a part of the Tata family and I look forward to working with all the group entities... We will work together to deliver business performance which are industry leading in all our businesses and lead, not follow.

The first big challenge for Chandra, as he is fondly called, will be to restore credibility at the $103-billion salt-to-software Tata Group after the ouster of Cyrus Mistry as chairman on 24 October 2016, triggered a messy boardroom and a legal battle, according to investor advisory firms.

Mistry was also ousted as a director of Tata Sons in an extraordinary general meeting called on 6 February by the group’s holding company. He had chosen to step down from Tata Group companies after his removal from the board of Tata Consultancy Services Ltd (TCS).

In addition to various legal imbroglios that the group is now involved with, which will periodically flare up and need to be doused, there are a host of other issues – the strategic direction the group takes, its corporate culture and, most importantly, the brand and how to keep it relevant.

Institutional Investor Advisory Services’ Note

Protecting TCS

The new chairman of Tata Sons will have to ensure that his shift from the group’s biggest company, TCS, does not impact the performance of software services provider, JN Gupta, founder of investor advisory firm Stakeholder Empowerment Services, told BloombergQuint over the phone.

Chandra will no longer have a direct oversight over the affairs of TCS. If it stutters, the group’s troubles will multiply. Ensuring that this does not happen needs to be high on the agenda.

Institutional Investor Advisory Services’ Note

Rajesh Gopinathan has been named as Chandra’s successor at TCS and NG Subramaniam as the chief operating officer. Gopinathan and Subramaniam were also inducted on the board of TCS on February 20, 2017. V Ramakrishnan will take over as the new chief financial officer from Gopinathan, who begins his term as chief executive officer and managing director on Tuesday.

Mistry’s Allegations

The street will keenly watch how Chandra handles the allegations levelled by Mistry about governance at the Tata Sons’ board.

Whatever issues have been flagged by Mistry, Chandra should get them reviewed by a third party, Gupta said.

He has to ensure that governance structures, practices, and disclosures are put in place so that the recent events are not repeated, Institutional Investor Advisory Services (IiAS) said in its note.

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