Tata Sons looks to induct pros on its board | Economic Times

Tata Sons, the holding company of the Tata Group, is expected to “augment and refresh the board” in the coming months as some directors step down after completing their term or because they have reached the mandated retirement age of 70, top officials close to the development said.The appointments will include independent and trust nominees, it is learnt. The five-year term of Tata Sons chairman N Chandrasekaran, who was appointed in February 2017, will also be up for renewal next year and will be discussed in the coming months, officials said.He joined the Tata Sons board in October 2016, was designated chairman in January of the following year and took official charge in February 2017. He also chairs the boards of operating companies such as Tata Steel, Tata Motors, Tata Power, and TCS. A new five-year term for the current chairman is expected to be a smooth affair, said the people cited.83291295Tata Sons did not comment.Top Tata Group insiders told ET that Chandrasekaran or Chandra as he is widely referred to, regularly consults Tata Sons’ chairman emeritus and Tata Trust chairman Ratan Tata on important matters regarding the group’s overall direction. “Unlike the earlier chairman of Tata Sons, there is constant consultation and engagement between the Tata Sons chairman and Tata Trusts on critical matters. So the interests and values of the largest stakeholders in the group businesses are taken care of in a more holistic manner,” said an official close to Tata Trust.Group watchers say the number of board members of Tata Sons is the lowest at 7 compared to over 15 that the conglomerate had at one time.“The board, however, will not revert to being a large one to avoid conflict of views between Tata Sons and operating companies that will stretch the current synergy. The Tata Sons chairman is also present on the board of large group companies which ensures uniformity in direction and strategy. Also, Tata Sons does not directly manage different businesses and each of the large operating companies such as TCS, Tata Steel or Tata Consumer themselves have diverse boards,” said a highly placed group official.Farida Khambata, co-founder of investment firm Cartica and the first woman director on Tata Sons, has stepped off the board recently. Two other top directors are also likely to step down soon after their term ends, it is learnt.Company watchers say the holding company of the $106-billion group needs to strengthen its board by inducting professionals from diverse backgrounds to raise the quality of discussions to help the conglomerates to tackle the complexity facing some of the older businesses the group is in.A frame of reference while inducting new members could be the Sweden’s Wallenberg group that has multiple companies, both private and public, including a foundation, and has a diverse and strong board to guide the group.“If it considers the future of businesses in a rapidly tech-led changing world, then it is good for the holding company to raise the level of strategic discussions on board” a Tata Sons director said. He spoke on condition of anonymity. The Tata Sons board needs to be strengthened as it decides on the all-important issue of capital allocation, said the persons cited.“While it is convenient to hold the view that a large diverse board is not required, it is imperative to have a sustainable and perpetual structure for a group that Tata is. A strong leader with an even stronger team is better for a group with a stature of Tatas than just having a rubber stamp holding board,” said another senior official close to the developmentThe Tata group's improvement in performance in the last two years in the midst of Covid-19 has also been rewarded by the stock market. Officials said except for hotels and airlines, most businesses have been on a good wicket even in a challenging business scenario.Earlier this year, Tata Group regained the most-valued corporate house tag in India in terms of market capitalization overtaking the HDFC group on the back of the record-breaking rally in the shares of its listed firms.Twenty-three of the 29 listed Tata firms have outperformed the Nifty since 1 January.Though group revenues have risen just 2.56% in FY21, net profit was better than expected at 14.55% highest at ₹32,783 crore.