Ratan Tata

Mumbai, Aug. 4: Ratan Tata has formally started a hunt for a successor who will take over as chairman of the $72-billion group in a little over two years from now.

Tata Sons — the group’s holding company — today announced that a five-member selection committee had been formed to pick the person who will take over from Ratan Tata after he steps down in December 2012 when he turns 75.

Four members on the selection committee belong to the group. The panel also has an “external member”. No names were disclosed.

“The committee has commenced its work,” the announcement said. It is now formulating the criteria to identify the most suitable candidate “taking into account the global nature and complexity of the group’s business at the present time”.

The Tata group — which comprises more than 80 companies that deal in a wide range of products from steel to automobiles, and from salt to software — earns 65 per cent of its revenues from its overseas operations.

The announcement comes within days of Noel Tata’s elevation as managing director of Tata International Ltd, the group’s global trading arm.

The committee “will consider suitable persons from within the Tata companies, other professionals in India as well as persons overseas with global experience,” the announcement said.

Noel Tata, the 53-year-old half brother of Ratan Tata, is seen as a very strong contender for the post. At Tata International, he will be able to gain valuable exposure to the group’s global operations. Until now, Noel has turned Trent — the retail arm that runs the Westside outlets — into a successful operation.

Noel, who has kept a low profile all along, is also the son-in-law of Pallonji Mistry, the single largest shareholder of Tata Sons. However, the controlling interest in Tata Sons still remains with two trusts — the Sir Ratan Tata Trust and the Sir Dorabji Tata Trust.

Others seen as possible contenders for the top job include Citigroup’s CEO Vikram Pandit, PepsiCo boss Indira Nooyi and former Vodafone Plc CEO Arun Sarin. These names had cropped up after Tata had told the Wall Street Journal in an interview last year that his successor could be an expatriate.

The buzz is that R.K. Krishnakumar, Tata Sons director and vice-chairman of Indian Hotels Company, and N.A. Soonawala, Tata Sons vice-chairman, are on the selection committee. The other panel members are believed to be from the two trusts but this could not be confirmed.

There will almost certainly be a hand-holding period when the successor will be groomed for the top job. “The final selection would be made in adequate time to effect a smooth transition and change of leadership before Ratan N. Tata’s retirement at the end of December 2012,” the statement said.

Ratan Tata will step down after a 22-year stint at the top. He had taken over the mantle from JRD Tata in March 1991.

In the mid-nineties, Ratan Tata had put in place a retirement policy for the head honchos within the Tata group. Under the policy, officials had to relinquish their executive positions at the age of 65 while non-executive directors, including the chairman, would have to retire at the age of 75.

Ratan Tata has often spoken of his desire to retire when he turned 75. Four years ago, he told The New York Times in an interview: “I’d like to retire when I can still walk and play golf and fly and do all the things that I like to do.”

Last month, he told shareholders of Tata Consultancy Services that he would stick to the retirement deadline. “We are also human and we must move on and others should get a chance to take our place,” he had said.

His predecessor, JRD Tata, had retired when he turned 86, after a 53-year stint as chairman — a post he assumed in 1938.