New Delhi: Natarajan Chandrasekaran, the CEO of Tata Consultancy Services, was named the new Chairman of Tata Sons on Thursday, signalling an end to the uncertainty that has gripped the $100 billion coffee-to-cars conglomerate since the sacking of Cyrus Mistry.
N Chandrasekaran was appointed to the top post after a board meeting of the holding company Tata Sons, and on the same day that TCS posted its quarterly earnings, which were better than expected. TCS chief financial officer Rajesh Gopinathan is likely to be appointed as the software services company’s chief executive.
The move comes nearly two-and-a-half months after Tata Sons sacked Cyrus Mistry as chairman, triggering a bitter boardroom battle that saw both sides trading allegations of financial impropriety, conflict of interest and incompetence. The turbulence at one of India’s most respected groups also eroded market confidence and raised questions about corporate governance.
Ratan Tata, one of India Inc’s most respected figures, resumed his position at the helm of Tata, this time as interim chairman. He promised to step down as soon as a permanent Chair was appointed.
In October, Tata Sons’ board set up a five-member selection committee, which included Ratan Tata, to choose a new chairman within four months.
Tata Sons is the holding company for the Tata group.
Market participants were upbeat about Chandrasekaran’s appointment. Reactions on CNBC TV18 were positive because of the feeling that the Tata Group has appointed a “safe pair” of hands to guide the conglomerate after a messy period in its history.
Although, the reasons for the “coup” are not entirely clear, the fallout eroded Rs 1 lakh crore from the M-cap of listed Tata firms in the month after October 24. Investors held off from buying Tata scrips because the shares were underperforming. Although TCS was caught in the market maelstrom, it weathered it well.
TCS, India’s largest IT company, is considered to be the cash cow of the Tata Group. The company’s market capitalisation is around $67 billion, which is more than 60% of the total M-cap of the Tata Group and the company has weathered the Indian IT downturn and the American H1B visa scare well.
Net profit for the October-December quarter rose 2.9% whereas total income rose 10.1%. Revenue in rupee terms rose by 8.7% to Rs 29,735 crore. The company’s return on investment (RoI) is phenomenal. It employs 10% of the group’s total capital while contributing much more than that in income and dividends, according to CNBC TV18.