Is married to Ratan Tata
The Tata Group is planning its future
Most family businesses in India are ill-prepared for the patriarch's departure. The Tata Group is an exception. She is professionally preparing the announced retirement of Ratan Tata and has already chosen a successor.
Ever since Ratan Tata announced in July 2010 that he would hand over the helm of his economic empire when he turned 75 at the end of 2012, the Indian public has been speculating with excitement about who will be his successor. There is hardly a well-known CEO from home or abroad who was not treated as a potential candidate in the media. The head of the Tata Group has no children, and the handover to a son who has grown up in the company, which is common in India, is therefore out of the question. Ratan Tata also fueled speculation with the statement that a company outsider could also be considered as the new boss. What seems to be taken for granted in the West is a minor sensation in India - where a majority of companies are still family-owned.
And yet an insider
Tata is one of the most professionally run corporations, but is very family-oriented. In its 143-year history, the group was led only once (1932–1938) by a non-Tata. Many observers familiar with the company therefore expected that in the end Noel Tata, the half-brother of the now 73-year-old Patriarch, who was around 20 years younger than him, would win the race. They were wrong, as were all those who had bet that the group would choose a reputable outside business captain.
After long deliberations, a specially appointed committee decided to make a compromise candidate for the new helmsman that nobody had expected: Cyrus Mistry. The 43-year-old is the younger son of Pallonji Mistry, a major shareholder in the Tata Group. His sister is married to Noel Tata, and the Mistrys and Tatas have both business and family ties. In addition, both families belong to the small and closely networked religious community of the Parsees.
The Sharpoorji Pallonji Group, active in the construction and real estate business, has been a partner in Tata Sons for over 80 years. With a stake of 18.4%, the Mistrys are the largest single shareholders in the group today. The remainder of the shares are owned by two Tata trusts and Tata subsidiaries. Cyrus has been a member of the Tata Board of Directors since 2006, but he was not well known either inside or outside the group. Following the announcement, many analysts accordingly raised the question of whether the blank slate was up to the challenge. The family company he runs employs only 23,000 people and is only active on the subcontinent.
Running a complex multinational giant like Tata Group is a different matter. With a turnover of $ 83 billion, the conglomerate comprises over a hundred companies that are active in fields as diverse as IT, telecommunications, hotels, construction, energy, automobiles, chemicals and raw materials. The Tata Group operates in 80 countries and currently employs more than 425,000 people.
Mistry has the difficult task of consolidating the conglomerate, which has grown many times over under its predecessor. Since he took over the chairmanship from his uncle J.R.D. Tata in 1991, Ratan Tata has streamlined the organization and globalized the group. Before that, it was a loose association of strong individual companies. Ratan disempowered their bosses and personally influenced the strategic direction of all companies. In 1991, the group had almost all of its sales on the home market; today, 58% is generated abroad. Several subsidiaries have made sensational major acquisitions abroad under Ratan. Tata Tea took over Tetley in 2000, Tata Steel in 2007 Corus and Tata Motors in 2010 Land Rover and Jaguar.
Although Tata is a multinational giant today, the brand is still strongly associated with its Indian heritage. Some analysts had hoped that the group's direction would become more international with the appointment of a foreign business captain. However, Mistry's appointment is seen as a sign that the group continues to feel attached to traditional values that, according to insiders, sometimes get in the way of multinational business.
Cyrus Mistry will be Ratan Tata's deputy until the end of 2012. The long-planned change in leadership is unusual for India and should be an example for other company bosses, according to a commentator for the business newspaper Mint. At Tata, even the top management team has to retire at 75.
Many other firms, however, have no retirement arrangements, and many patriarchs cling to power until death and do not prepare to leave. In many cases, the lack of planning has led to destructive legacy battles. One of the most shocking examples was the dispute over the legacy of Dhirubhai Ambani, founder of India's largest company, Reliance. Ambani had left no succession plan, and after his death a bitter and extremely costly argument broke out between his sons Mukesh and Anil, which ultimately resulted in the division of the empire.
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