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Whenever someone succeeds a relatively famous and accomplished person, in any walk of life, it is almost always said that the successor will have very big shoes to fill. In the case of Cyrus Mistry, who will be the next chairman of the Tata Group, the sprawling Indian conglomerate, it may well be so. There is no shoe bigger than the Tata chairmanship in Indian business, and seemingly, replacing the bigger than life Ratan Tata is an almost impossible act to follow.
Tata is not just another conglomerate. The business group touches the lives of Indians in a way probably no other company does anywhere in the world. Many Indians start their day with a cup of Tata tea or coffee, drive a Tata vehicle to work at a Tata company, use a Tata phone and access the internet using a Tata service. On returning to their Tata-built homes, they will watch television on a Tata network before retiring to their bedrooms made comfortable by air conditioners also built by a Tata company. On weekends, they shop for grocery at Tata-run supermarkets or may stay at a Tata hotel or resort for a weekend getaway. They may rely on the schools, colleges, and hospitals that are financed by the Tata philanthropic trusts, including prestigious institutions such as the Indian Institute of Science in Bangalore and the Tata Memorial Hospital in Mumbai.
With more than 100 operating companies with aggregate annual revenues of more than $83 billion under its umbrella, it is no wonder that the Tata group holds such sway in its home country. The most valuable Indian corporate group in terms of market capitalization, the Tata group now employs 425,000 people worldwide. But over the last decade, the group has expanded into overseas markets through aggressive acquisitions to emerge as a genuine transnational. Today, the group has a presence in 80 countries on six continents. Tata is now the largest industrial manufacturer in the U.K., with nearly 60% of group revenues coming from markets other than India.
Almost all of Tata’s overseas forays happened during the term of the eponymous current chairman, who transformed a loose federation of companies into a more closely knit group with clearer strategic focus. In the two decades he has been at the helm, Mr. Tata has sold off underperforming businesses and has facilitated the rapid expansion of the group’s major companies. Tata Steel is now among the top-10 steel manufacturers globally, while Tata Consultancy Services is now Asia’s largest technology services and outsourcing company. Tata Motors, the fifth largest commercial vehicle manufacturer in the world, has established itself as a global car maker with the acquisition of Land Rover and Jaguar.
“I have been impressed with the quality and caliber of his participation,
his astute observations and his humility. He is intelligent and qualified
to take on the responsibility being offered.”
- Ratan Tata, Tata Group chairman, speaking about his successor
Mistry starts with several apparent handicaps. While he has successfully managed his family’s construction business since the mid-nineties, the leadership required to manage a conglomerate that makes everything from table salt to software requires a different set of skillsets. Notwithstanding his MBA from London Business School, it is not readily evident if Mistry has the strategic management depth essential to steer diverse global businesses. Further, despite his family’s wealth, Mistry has been virtually unknown even in Indian corporate circles until now. He will be only the second person from outside the Tata family to head the group since its founding in 1868. In a country where a famous surname and personal network can still open several doors, that could be a drawback.
Still, Cyrus has several advantages too. Both the Tata and Mistry families belong to the Parsi community, descendants of Zoroastrians who fled to India from ancient Persia. A board member of group holding company Tata Sons since 2006, Mistry is familiar enough with the diverse group businesses, and their strengths and weaknesses. As he is relatively young, Mistry will likely get an extended run at the top of the Tata group. Notably, the Mistry family is the Tata holding company’s largest shareholder, other than the Tata philanthropic trusts, leaving Cyrus with few challengers to his position. Noel Tata, Ratan’s half-brother, who was widely expected to become the new chairman, is married to Cyrus’s sister. That largely rules out any Tata family revolt against the outsider.
Curiously, Cyrus Mistry could well be one of the most powerful Irish nationals in the world now. The 43-year old father of two is the second son of billionaire Pallonji Mistry and his Irish wife, and though he is a resident in India, Cyrus has adopted his mother’s nationality. Mistry is married to the granddaughter of M. C. Chagla, a well-known former Indian federal minister, and, despite their fame and fortune, the family has so far shunned Mumbai’s social circles.
Apart from growing the myriad Tata companies, there is a greater Tata legacy that Mistry has to preserve. Though the recent controversies surrounding the Indian government’s telecom policy have dulled the group’s reputation, Tata remains inarguably the most respected and most transparent of all Indian business groups. It is this standing that has made the Tata brand name, currently valued at close to $15 billion, one of the most trusted in India. As investors’ tolerance of corporate indiscretions and loss of reputation continues to narrow, it appears that Mistry would do well to spend enough time and energy to keep the Tata name well burnished.
Over the next year, Mistry will shadow Ratan Tata who will groom his successor to take over the chairmanship by the end of 2012. Over this transition period, Mistry should get enough opportunities to get a clear measure of how big those shoes really are. Hopefully, as he grows into the role over the next few years, he won’t find them as outsized as they appear from afar.
Image Credit: Tata Group
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