N. Chandrasekaran begins long road to restoring Tata group’s image

Natarajan Chandrasekaran will take over as chairman of Tata Sons from interim chief Ratan Tata on 21 February


Natarajan Chandrasekaran is only the third person without the Tata name to get the job, and the first without a close family tie to the Tatas. Photo: AFP
Natarajan Chandrasekaran is only the third person without the Tata name to get the job, and the first without a close family tie to the Tatas. Photo: AFP

Bangalore/Mumbai: Amid the carnage on Wall Street in 2008, as Bank of America Corp. was trying to forge its rushed merger with Merrill Lynch & Co., Natarajan Chandrasekaran boarded a plane for New York to try to reassure the two financial behemoths that an Indian IT company could make the systems of their strikingly different cultures work together.

Chandrasekaran, known as Chandra, was then chief operating officer of Asia’s largest IT services exporter, Tata Consultancy Services Ltd (TCS). Over the following weeks he fended off global rivals who smelled an opportunity to muscle in, and set about integrating the banks’ systems and assuaging the new management’s anxieties about outsourcing to a foreign supplier. TCS kept the business and grew it substantially.

Last week, Chandra, now chief executive officer of TCS, was chosen for an even more fraught diplomatic task: to resurrect the image and fortunes of the Tata Group, India’s biggest conglomerate, which has been racked by losses at some of its biggest units, and by a boardroom battle that has threatened to turn the workings of the venerable corporation into a media soap-opera.

Tata Sons, the group holding company, named Chandra, 53, as chairman, taking over on 21 February from interim chairman Ratan Tata. Tata, 79, had run the family business for more than two decades before handing over in 2012 to his hand-picked successor, Cyrus Mistry. In October, Tata Sons shocked India’s corporate community by firing Mistry, reinstalling Ratan Tata and promising to find a replacement by March.

Chandra was a front runner for the job, a Tata employee almost all his working life, who grew TCS into the conglomerate’s most successful business, with about $16 billion in sales.

Yet he is both an insider and an outsider. While he has been with the group since joining as an intern three decades ago, he is the first chairman who is not a Parsi, the shrinking ethnic group of Zoroastrians that boasts a disproportionately high number of India’s business elite. He is only the third person without the Tata name to get the job, and the first without a close family tie to the Tatas.

IT Career

Moreover, his career and success has all been with TCS, virtually an island within the group that serves many of the world’s top corporations with a young, skilled, technical workforce. As head of Tata Sons, he will be responsible for a conglomerate that assembles buses in Zambia, serves prawn kalimiri to diners at its Bombay Brasserie in London, sells salt to Indian families at Rs18(27 cents) a kilo, and runs hundreds of other businesses across the world.

“He served both TCS and the customer commendably during the BofA-ML merger. Now he has the chance to build a positive organization by bonding together various companies and their half-a-million plus employees,” said S. Ramadorai, the previous CEO of TCS. “He is non-confrontational and, at the same time, does not foolishly ignore problems.”

Chandra’s appointment came after TCS announced it had made the equivalent of $1 billion in quarterly profit for the first time. Tata’s star unit accounts for over half of the group’s market value.

A five-man panel unanimously chose Chandra from a list of more than a dozen candidates. “He stood out both within the group and outside,” said former bureaucrat Vijay Singh, a non-executive director on the board of Tata Sons, which ratified the selection. A Tata Sons statement said Chandra would uphold the group’s values and adhere to its high standard of practices—things the board previously accused Mistry of failing to do.

“We are at an inflection point,” said Chandra in a statement after his appointment. “I am aware that this role comes with huge responsibilities. It will be my endeavor to help progress the group with the ethos, ethics and values that the Tata group has been built on.” Chandra declined an interview request for this story.

Steel losses

Facing him is a menu of corporate issues, including the money-losing UK operations of Tata Steel Ltd., the overhang from failed ambitions like Tata Motors Ltd.’s cheap Nano car, debt-ridden Indian Hotels Co., and a $1.17 billion arbitration battle with telecom partner NTT Docomo Inc.

Mistry has previously defended his time as chairman, when he tried to reduce debt built up during a series of global acquisitions by Ratan Tata. In an e-mail to directors after his dismissal, Mistry said the group may face Rs1.18 trillion in writedowns over time because of “ legacy hotspots” he inherited.

Mistry, whose family owns an 18% stake in Tata Sons, filed a case with the National Company Law Tribunal seeking the appointment of an administrator to oversee the company’s affairs, a forensic audit and a probe into the role of the trustees of Tata trusts, the majority shareholders of Tata Sons. He’s asked for Ratan Tata, head of the trusts, to be restrained from attending board meetings. A spokesman for Mistry said he would not comment as the matter is subject to the legal proceedings.

Investors expect Chandra to act quickly to resolve governance issues, said Shriram Subramanian, founder and managing director at proxy advisory firm InGovern Research Services Pvt. Key to his success will be how he handles Ratan Tata, who has indicated that he may step down as chairman of the trusts this year. Tata instigated the Nano project, a troubled airline venture and many of the other expansions that are now draining the group’s resources.

Tata congratulated Chandra on Twitter, saying he was sure the new chairman would protect “the group’s values and ethics.” A Tata Group spokesman declined to comment.

“Chandra is an optimist, he thinks big and will go after positive outcomes in the new job,” said Krishnakumar N., executive chairman of rival Indian IT services company Mindtree Ltd.

The son of a farmer in rural southern India, Chandra studied in a Tamil-language school rather than gaining the English-language education favored by the middle class.

He joined TCS in 1987 after completing a masters in Computer Applications from Regional Engineering College, Trichy, Tamil Nadu. His leadership talent was spotted by Ramadorai in 1993 when Chandra was praised by customer International Business Machines Corp. He was put in charge of a major project for British Telecommunications Plc. When Ramadorai became TCS’s CEO, he chose Chandra as his executive assistant.

“He loved meeting customers, and it was never a Hi-How-Are-You? kind of a meeting,” Ramadorai said in a telephone interview. “He put the client at the center of the universe, made every conversation count and nurtured clients like American Express.”

Young CEO

Chandra took over as chief executive of TCS in 2009 at the age of 46. Over the next seven years, he would triple the IT company’s share price and revenue and more than double its headcount.

As Chandra’s corporate universe expanded, so did his interests, according to colleagues. He’s fond of photography and classical music, but his real passion is running. He has run marathons in Boston, Chicago, Berlin, New York, Tokyo and other cities.

“Being a runner has greatly shaped my thinking as a leader,” Chandra told Runners World in October 2015. “You have to decide on the length of the engagement, develop endurance to handle setbacks and increase speed when the competition demands it. You have to perform with your heart and your mind.”

At TCS, Chandra backed new technologies from cloud to mobile and evangelized to global corporations about digital disruption, always with a reputation for building close relationships with clients. Som Mittal, former head of Hewlett-Packard Co.’s India operations, worked with Chandra for years in the software-industry trade body Nasscom and said if he texted Chandra, he’d get a call back within 20 minutes.

“Whether he was preparing for a marathon in London or stepping into a client meeting in New York, he unfailingly called back, no matter what timezone and which corner of the globe he was in,” said Mittal. He was also an inveterate traveler who would fly to client meetings even for the smallest deals. “He has this uncanny ability of making everyone think they are his dearest friends.”

Chandra drove projects at TCS that dispersed the chaotic crowds and touts that used to clog the entrances of India’s passport offices and its best-known hospital, the All India Institute of Medical Sciences in Delhi. He charted new territories for TCS in Latin America and Japan by hiring local talent.

His new role comes with a different set of challenges. He will have to stabilize the group and plan a decade or two into the group’s future, said Ramadorai. “It is a rough road.”

Looming over him will be the presence of a family that has been royalty in India’s business world for more than a century, and the scion of that family, Ratan Tata.

Chandra “is not afraid to express opinion and can be extremely firm when he is convinced about something,” said Mittal. “He is no pushover.” Bloomberg

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