Three factors appear to have tilted the scales in favour of the software executive, popularly known as Chandra:
• He is a 30-year Tata group veteran with a clean image.
• He ran the most profitable company in the stable, cranking up revenues at TCS to over a trillion rupees last year.
• The stint at the software giant with operations in as many as 55 countries has armed him with the experience to preside over the group at a time its overseas ventures need attention.
More about Chandrasekaran:
Chandrasekaran has also earned a reputation as a gritty road warrior, having run the New York and Boston marathons in recent years.
- He was picked by a five-member selection committee headed by group patriarch Ratan Tata as the seventh chairman of the 148-year-old group that Jamsetji Nusseerwanji Tata built in 1868. The Tata Sons board ratified the decision at its board meeting this evening.
- He will be the first non-Parsi to head the Tata group. Reports indicated that Jaguar Land Rover CEO Ralph Speth and Harish Manwani, former chief operating officer of Unilever, were also in the race.
- Chandrasekaran will assume the position as Tata Group chairman on February 21. On that date, he will step down as CEO of TCS and hand over charge to Rajesh Gopinathan.
- But he will be on hand to steer the fortunes of the Rs 108,646-crore software giant as its new chairman, eventually replacing Ishaat Hussain who was pitch-forked into the hot seat when shareholders voted on December 13 in favour of a Tata-backed resolution to remove Mistry as chairman of the software exporter.
"I am going to be available (at TCS) and continue on the board. I will eventually take over as TCS chairman," Chandrasekaran told analysts at a TCS conference call.
"Chandrasekaran has demonstrated exemplary leadership as the CEO and MD of Tata Consultancy Services. We believe he will now inspire the entire Tata group to realise its potential acting as leaders in their respective businesses, always in keeping with our value system and ethics and adhering with the practices of the Tata group which have stood it in good stead," the Tata Sons board said in a statement.
Chandrasekaran said: "At the Tata group, we are at an inflection point. I am aware that this role comes with huge responsibilities. It will be my endeavour to help progress the group with the ethos, ethics and values that the Tata group has been built on."
He said he was "humbled and honoured to be chosen to lead a truly great institution that occupies a unique position in the hearts of people in India and the world".
Chandrasekaran thanked the Tata Sons board and Ratan Tata "for their confidence in me to lead this trusted institution that has a rich heritage".
Industrialist Anil D. Ambani said: "Chandrasekaran's elevation as chairman of Tata Sons is an outstanding choice. Chandra... brings to the table an unparalleled track record of value creation and visionary leadership at TCS, the Kohinoor in the Tata Crown. Having run many marathons with him, I have the highest regard for Chandra's spirit of endurance, grit, determination and focus. He is, as they say, the complete package."
The Marathon Man, who lists Hyde Park in London and the route along the Charles river in Boston as his favourite places to run, can limber up for his longest race yet since he will have a 22-year stint at the top before retirement at 75.
Challenges:
- But the immediate challenge will be to deal with the bitter battle with Mistry, whose family holds 18 per cent in Tata Sons.
- Another boardroom battle looms on February 6 when Tata Sons has called a meeting to remove Mistry as a director of the group's holding company. Mistry has already challenged this move before the national company law tribunal.
- Experts say that relationship of the new Tata Sons chairman with the Mistry family will be crucial to the fortunes of the group. If the conflict between the Tatas and the Mistry family escalates, it has the potential of diverting the attention of the group's holding firm.
- "It needs to be seen what relations he (Chandra) maintains with the Pallonji group. While this will be one of his challenges, the other task will be to restore the reputation of Tata Sons and the group with respect to corporate governance," Shriram Subramanian, founder and managing director, InGovern, a proxy advisory firm said.
- Mistry had come out with disclosures that raised questions about the role and the overpowering influence of Ratan Tata and the Tata Trusts over the functioning of the holding company.
More details:
Chandrasekaran's appointment came on a day when TCS put up a better than expected performance for the third quarter ended December 31.
At a press conference held before the Tata Sons announcement, he said he was confident that TCS would be able to successfully tackle any challenge emanating from any change in the visa rules under the new Trump administration in the US.
Besides being a Tata group veteran, Chandra has the advantage of running the most profitable group in the company that accounts for about 88 per cent of the group's profits with operations in 55 countries. The TCS boss has also built up a strong working relationship with several global giants.
With over 371,000 consultants, TCS with a market cap of over $ 70 billion, is now the largest private sector employer in India.
"He is delivery focussed and he is one of the few executives across the Tata group who has put up a stunning performance and that too on a consistent basis," a Tata group insider said.
"He has a clean image, he has had a successful professional career. Since he has been with the group for almost three decades, he is well aware of the Tata culture. Anyone else would have taken a few years to adapt to the Tata culture. It's a great appointment and the Tatas have selected their best professional to be chairman of Tata Sons," said Arun Kejriwal, director, KRIS, an investment firm.