Noels elevation sparks succession buzz at Tatas

Written by Press Trust of India | New Delhi | Updated: Jun 29 2010, 05:00am hrs
Succession has been a big enigma at the Tata Group and the appointment of Noel Tata as chairman of Tata Investment Corporation (TIC) has triggered speculation that he will step into the shoes of his half brother Ratan Tata as chairman of the conglomerate.

Noel (53) was appointed chairman of TIC, the non-banking financial arm of the Tata group, last week to succeed NA Soonawala as non-executive chairman. Soonawala was appointed MD of Trent, a company set up by the group in 1998 for the retail business. Soonawala, as per Tata Sons website, is vice-chairman of the holding company.

Apart from being from the Tata family, Noel is also the son-in-law of Pallonji Mistry, who according to the US business magazine Forbes, has over 18% stake in Tata Sons and is widely believed to have the value system of the group, which is mandatory for being the successor.

Pallonjis son Cyrus Pallonjy Mistry is on the board of Tata Sons. When contacted, a spokesperson declined to comment on the speculation but sources in the group said that appointment of Noel was a decision by the TIC board and particularly outgoing chairman Soonawala, a powerful member of Tata Sons board, which is the holding company of Tata empire.

They, however, clarified that not too much should be read into the development, as TIC is a relatively small company in the group and the appointment should not have any relevance to the succession issue in the Tata group.

In a filing to the Bombay Stock Exchange on June 23, TIC said that its board has approved the appointment of Noel Tata as non-executive chairman of its board of directors with effect from June 24. The board also approved the appointment of F N Subedar as non-executive vice chairman of TIC.

In the Tata group, there is an age limit of 75 for serving as non-executive chairman and Ratan Tatas term is scheduled to end in December 2012.

Earlier this year, Ratan Tata had told reporters, I said that after (launching small-car) Nano, it will be a good time to step down...I still have a deadline for my retirement. I do have the responsibility to have a successor and both these things will take place.

In his earlier interviews, Ratan Tata had said that realistically his successor would need up to 18 months as handover time.

It should not be longer because the way things work, there would be tremendous pressure to unseat that person, he was quoted in an interview in 2008 to a financial weekly.

Tata said his successor should have values and that is one of the issues that makes the question of succession so difficult.

The person must maintain our values, because they are, in a manner of speaking, the DNA of the group, the crown jewel of the group, he had said.