Mumbai, Nov. 23: The Tata group has picked the person who will lead the $83.3-billion group next year ó and he doesnt carry the famous name that has always exemplified in India a fine blend of wealth, ethics and gentility.
Cyrus Mistry, 43, will succeed Ratan Tata when the current chairman steps down in December next year.
Mistry was appointed deputy chairman of Tata Sons at a hush-hush board meeting held here today. The Telegraph had reported on Wednesday that the board could take a decision on Ratan Tatas successor ó or at least provide some clarity about the selection process that has dragged on for over a year.
But no one had anticipated todays bombshell announcement.
The board of directors of Tata Sons at its meeting today appointed Mr. Cyrus P. Mistry as deputy chairman. He will work with Mr. Ratan N. Tata over the next year and take over from him when Mr. Tata retires in December 2012. This is as per the unanimous recommendation of the selection committee, the groups apex holding company said in a statement.
Mistry, who will be the sixth chairman of the Tata group, is virtually unknown outside the tightly knit Parsi business community and belongs to the low-profile, media-shy Shapoorji Pallonji group.
The younger son of Shapoorji Pallonji, the construction magnate who is the single largest shareholder of Tata Sons, Mistry is an engineer and a management graduate who is credited with increasing Pallonjis construction business from a turnover of $20 million to $1.5 billion.
I feel honoured by this appointment, Mistry said. In keeping with the values and ethics of the Tata group, I will undertake to legally disassociate myself from the management of my family businesses to avoid any issue of conflict of interest.
The most striking aspect of this keenly awaited and widely debated appointment is that Ratan Tata has chosen a successor who is in his own mould ó unassuming, shy and untested in running a mammoth conglomerate of 100 companies spread over 80 countries and spanning six continents.
Ratan Tata said: The appointment of Cyrus P. Mistry as deputy chairman of Tata Sons is a good and far-sighted choice. He has been on the board of Tata Sons since August 2006 and I have been impressed with the quality and calibre of his participation, his astute observations and his humility.
He is intelligent and qualified to take on the responsibility being offered and I will be committed to working with him over the next year to give him the exposure, the involvement and the operating experience to equip him to undertake the full responsibility of the group on my retirement, Tata added.
It is only the second time in its 143-year-old history that the Tata group will have a non-Tata as its chairman.
Back in 1932, Sir Nowroji Saklatvala headed the group as its third chairman till his death in 1938. Sir Nowroji was succeeded by JRD Tata, who headed the group for 53 years before handing over the baton to Ratan Tata in 1991.
However, Sir Nowroji was the nephew of Tata group chairman Jamsetji Nusserwanji Tata and could, therefore, claim to have family connections.
JRD Tata was not a direct descendant of Jamsetji Nusserwanji Tata either. However, he was also related to the Tata group founder through his grandfather, Dadabhoy Tata.
Mistry is not a Tata descendant though his sister is married to Noel Tata, Ratan Tatas half-brother who was also in the race for the position but was passed over.
Ratan Tata has often said in the past that the new chairman would have to epitomise some of the values that are deeply embedded in the Tata brandname that he firmly put on the world stage after a string of big-ticket acquisitions over the past decade. He had also hinted several times that it wasnt necessary for the incumbent to bear the family name ó a trend that has been seen at several eponymous storied brands in the US and Europe.
Last year, the Tata Sons board appointed a five-member committee that included Mistry to vet the credentials of several candidates both from within and outside the group.
Early this year, reports suggested that the committee had found no one who fit the bill ó which appeared to darken the prospects of a rank outsider heading the group. The selection committee met 18 times since August 2010 to decide on Ratan Tatas successor.
After considering candidates from within the group, outside and overseas since August last year, it struck the committee that Cyrus Mistry would fit the bill beautifully. And then the evaluation began, said a senior Tata group official.
At this point, Mistry submitted himself to the same rigorous evaluation process that the other candidates had been subjected to. At the same time, he excused himself from any deliberations whatsoever of the selection panel in making its decision, the official added.
After it became clear that the selection committee had not agreed on a candidate from outside the group, speculation increased that Noel Tata was the top contender for the job.
Noel Tata, who turned Trent into a successful retail operation with its Westside Stores, apparently lacked the heft that was necessary to fill the position. To give him greater exposure, the Tata group named him managing director of Tata International, which oversees the groups foreign operations.
At one stage, it was conjectured that Noel would be assisted by Tatas leading managers, Tata Motors vice-chairman Ravi Kant, Tata Consultancy Services S. Ramadorai and Tata Steels B. Muthuraman, who would be named as directors in Tata Sons.
Sources said it was obvious that these appointments had not been made and Mistry would choose to bring his own men into the Tata Sons board.
Charitable trusts control 66 per cent of Tata Sons. Ratan Tata will continue as chairman of the Sir Ratan Tata Trust and the Sir Dorab Trust ó two of the biggest trusts that hold stakes in Tata Sons.