Tata Group should have appointed an outsider as Chairman: Pai
Former Infosys executive and renowned investor Mohandas Pai said he isn‘t a strong advocate of an â€œinsiderâ€ getting the top job at Tata Sons, pointing to the stress that Tata Group companies â€” barring Tata Consultancy Services â€” are undergoing.
Even as the appointment of N Chandrasekaran as Tata Sons Chairman was acclaimed by most, one industry veteran believes the Tata Group missed a trick by not appointing an outsider as chief.
Former Infosys executive and renowned investor Mohandas Pai said he isn’t a strong advocate of an “insider” getting the top job at Tata Sons, pointing to the stress that Tata Group companies — barring Tata Consultancy Services — are undergoing.
“All businesses [of Tata Group] are in need of a drastic surgery,” Pai said in an interview to CNBC-TV18. “An insider is only going to be cautious about what he does,” he added, expressing concerns over erosion of shareholder value.
On the other hand, an outsider as the Chairman can look at the businesses dispassionately and chart out a 10-year strategy for the Tatas, he said.
“You need an outsider with a fresh view, with a guarantee that the insiders will support him on merit and work together to remake the Tatas. I think, having an insider will not work,” Pai opined.
He went to the extent of saying that there was the need for a “surgical strike” at the Tata Group, alluding to the weak performance of group companies. “Tata Steel is going nowhere. They destroyed shareholder value by doing the Corus deal,” he said.
India’s largest private sector steel company Tata Steel had acquired Corus Group in 2007 for a whopping USD 12 billion.
Further, Pai referred to Tata Group units such as Tata Motors, Tata Global Beverages and Tata Chemicals. “Tata Hotels [Indian Hotels] has to come out of the hole that it has dug itself into,” Pai said.
Pai also expressed apprehensions over the impact that Chandra's exit may have on TCS' high growth rates.
“Chandrasekaran was a fantastic talent. After NR Narayana Murthy and Nandan Nilekani, he has done a great job,” he said.
Separately, TCS announced that Rajesh Gopinathan will take over as Chief Executive Officer, after Chandrasekaran's departure. TCS also said it had elevated NG Subramaniam, Chandrasekaran’s elder brother, as Chief Operating Officer.