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CNBC-TV18 rounded up a few commentators on corporate management to understand what they make of Tata's decision to make Cyrus P Mistry the heir to his USD 80 billion empire. Check out!
The Board of Tata & Sons chose Cyrus Mistry as the successor to Ratan Tata today. Mistry will be taking over the near USD 80 billion conglomerate as chairman once Ratan Tata steps down in December 2012.
CNBC-TV18 rounded up a few commentators on corporate management to get a perspective of what the street thinks of this decision.
While Indrajit Gupta, editor, Forbes India says that Mistry is a perfect choice, Sunil Jain, opinion editor at Financial Express says that the decision did come as a surprise to him. "Mistry currently handles a company that is very small in size when compared with the Tata empire," he says. He however also says that Mistry could well surprise the street with his prowess.
DN Mukherjea, editor, Fortune India plays his bets on Cyrus' youthfulness and open-mindedness. "Given his age, he will be the chairman for the next 30 years when business across the globe will be undergoing massive changes," he says.
Below is the edited transcript of their comments. Also watch the accompanying videos
Indrajit Gupta, editor, Forbes India
Q: Cyrus Mistry if one of the regular people who make it to your Forbes India Richest list. Were you surprised by the announcement today?
Gupta: I don’t think there was any indication that Cyrus Mistry would get selected, but if you ask me, I think it’s a great choice at one level because he being on the Tata Sons board, he understands the Group. He also represents the largest shareholder which brings in some strong sense. He understands the value of the Tata Group. He has led the Pallonji Group, part of it at least along with his brother, on distinction, which is why he got nominated to the Tata Sons board in the first place, despite being the younger brother. So all in all, I think it’s a good choice.
Q: Can you tell us little bit about how involved Cyrus Mistry really has been with Tata Sons?
Gupta: For people who know Cyrus Mistry and the Pallonji Group, he is very powerful, and is an entrepreneur who in some ways is fairly pragmatic. On the Tata Sons Board, his role has frankly never been made public. He keeps a low profile like his dad. So I am not sure whether any of us have a great handle on his role, but I think if you hear all the statements that have come up, clearly, he is positioned as someone who is intelligent, made valuable contributions to the board, and the fact that he was part of the selection committee itself, should tell us a bit about the trust that Tata has on him.
Sunil Jain, opinion editor, Financial Express
Q: Cyrus Mistry is Ratan Tata’s successor. What do you make of it?
Jain: Well, the first one is wow! People looked at the possibility of Tata’s half-brother succeeding him, but nobody looked at Mistry. I think for all you know, he may turn out to be a good chief. We had the Tata people telling us that he has the trust of the board which is very important. Ratan Tata had no experience when he became the chief. If you look at people, be it Mukesh Ambani, everybody began with no experience.
One important caveat is times are different from the old days. The Tatas were an almost entirely Indian company. Today they are almost 60-70% foreign company. You are talking about a conglomerate, you are talking about the global environment. It is dramatically different there. So Mistry at the end of the day is probably a very good manager, but he runs a mid-sized realty or a construction company, whereas the needs of the Tata Group are very different which is why at one time you heard names like Indra Nooyi doing the rounds or Arun Sarin. So yes, Cyrus has come as a big surprise.
One always felt that the Tatas were this professional group and in a sense, they factor a family venture. The largest shareholder’s son should become the chief executive, that sort of makes you worry a bit. But as I said, he could surprise us. The initial reaction is of shock- wow, who is Mistry, and what he is right now…
Q: So you believe that as far as this decision is concerned, ownership has once again played the trump card?
Jain: That’s what it seems. The people in the selection committee are telling us something different. We don’t know what actually happened inside, but as an outsider you do get the feeling that the family connection has played a huge role.
DN Mukherjea, editor, Fortune India
Q: Your first thoughts because pretty much everyone that we have spoken to so far has been surprised…
Mukherjee: The conversations that we have had with Tata in the past as far as his succession was concerned, he always kept on saying that he would love to have somebody very young to takeover. So I suspect that would have been on the minds of the committee that was looking for the successor as well. I would also imagine that Cyrus is not entirely unfamiliar with the group, given who he is, given who his father is. So he’s not as much of an outsider as people suspect he is.
I think it’s great news that they are betting on somebody so young to take over the group because if you look at it, given his age, he will, if all goes well, be chairman of the group for the next 30 years. And next 30 years, the business environment all around the world will change so dramatically that you need a young person who perhaps has an open mind, doesn’t come with too many set ideas. A person like that would perhaps be willing to adapt more than if you got somebody in his mid-50s or late 50s.
Q: It really is in a sense a vote for continuity because you pointed that out and we have had pretty much everybody else comment on that that Cyrus Mistry is perhaps going to be around for the next 25-30 years. So in that sense Ratan Tata putting a man in place and voting for continuity?
Mukherjee: Just imagine how the world will change within those 30 odd years. Technology, the way people react to news... The global corporate landscape will be completely altered in the next 30 years. You have seen how it’s got altered in the last decade. Imagine the kind of bets that Cyrus will be able to take going forward. I really believe that it’s great to have a young person with an open mind there. One thing which people are missing out in all this is that all the names that were being confirmed in the press, whether they were Indra Nooyi or it was Noel Tata, they are considerably older than Cyrus is. That really tells you the way the nominations committee was thinking.
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