Challenges ahead for new Tata chief

Cyrus Mistry tasked with raising revenue fivefold to US$500b by 2021

PUBLISHED : Saturday, 29 December, 2012, 12:00am
UPDATED : Saturday, 29 December, 2012, 4:58am

Cyrus Mistry, who took charge yesterday at Tata, India's biggest business group, may face an uphill battle if he is to meet his predecessor's vision of boosting revenue fivefold to US$500 billion in the next decade.

Mistry, 44, becomes chairman of Tata Sons, the holding company for the salt-to-software group, just as slower economic growth dampens demand for products from steel to cars.

Ratan Tata, who steps down on turning 75 after two decades at the helm, built the business into a US$100 billion global conglomerate through acquisitions including Britain's Corus Group and Jaguar Land Rover. Tata succeeded his uncle in 1991 as India's economy was opening up.

"It is not an easy task to grow fivefold in this global economic scenario," said Shishir Bajpai, senior vice-president at IIFL Wealth Management in Mumbai. "The bar is set high for Mistry to deliver. Ratan Tata took a group well known in the domestic markets global, now Mistry has to take it forward."

The change of guard marks a rare opportunity to shape the group of more than 100 companies, whose expansion has mirrored India's emergence as a global economic power and ranks Tata above Japan's Panasonic and Swiss food giant Nestle by sales.

At stake is the equivalent of about 6 per cent of India's gross domestic product, and the future of firms including Tata Steel, India's biggest producer of the alloy, and Tata Motors, the nation's No1 carmaker by revenue.

Mistry's performance could also weigh on his family's fortune: along with his billionaire father, Pallonji Shapoorji Mistry, and his brother, the chairman's family owns about 18 per cent of Tata Sons.

Little is known about the London Business School management postgraduate's leadership style or strategic vision, and the man chosen by a select search panel in November 2011 has so far shied away from the media and investors.

"I haven't heard from him on company plans, so I don't know" how Mistry will lead, said Koen Vanderauwera, a Luxembourg-based bond-fund manager at KBC Asset Management that holds the debt of Tata Steel and Tata Power. "I'll wait and see what kind of announcements he makes, how he comments."

The US$500 billion revenue vision for Tata in 2021 was outlined by Ratan while addressing his top executives in April, and confirmed by Tata Sons director R. Gopalakrishnan. Group spokesman Debasis Ray declined to comment on the vision or Mistry's plans for Tata. "Such matters are internal to the company," Ray said in an e-mailed reply to a query.

Mistry and the Tatas follow the Zoroastrian religion and belong to the small Parsi community, which originated in Persia and found sanctuary centuries ago in India. The Tata group was founded by Ratan's great-grandfather Jamsetji Nusserwanji Tata, who started a textile-trading business in 1868 and then built the country's first steel mill and hydroelectric plant.

He also built the Taj Mahal Palace & Tower hotel in Mum- bai, which was damaged in the November 2008 terrorist attacks.