Ratan Tata, search for whose successor has just started, has said that holding company Tata Sons did not have the legal or moral right to control numerous firms in early 1990s and efforts to make them a meaningful group were resisted internally.
"There was a question ... as to whether we had the right to claim to manage these companies. In fact, we didn't have the legal right, or even the moral right, to manage them," Tata, credited to take the group global after taking charge in
1991, was quoted as saying in a book 'Tata The Evolution of a Corporate Brand'.
According to the book efforts to make the companies work together as a meaningful and recognisable group were resisted with great vigour and some executives like Tata Steel's then
chief Russi Mody solved the problem by stepping down.
Incidentally the book was released around the time when Tata Sons announced a search panel for successor to Ratan Tata, who himself wants the next Chairman's name finalised by March 2011.
Mody, who was once touted to become Tata Group chairman before Ratan Tata took over, earlier this week had said that someone from the Tata family alone should spearhead the group
conglomerate adding any outsider would not sound good.
The search process, to be conducted by a five member panel comprising former Tata Sons vice chairman N A Soonawala, senior Group directors R K Krishnakumar and Cyrus Mistry,
Group adviser and lawyer Shirin Bharucha and influential British businessman Lord Bhattacharya, has led to speculation that Ratan Tata's half brother Noel Tata, who is increasingly
being given more responsibilities in the group, would be the next man in charge.
It may be recalled that Tata had in an earlier interview to a business magazine said in 2008 that "I do not want to go out on a wheelchair." He was responding to queries about the succession issues in comparison with that faced by his predecessor J R D Tata.
He told the weekly that realistically his successor would need up to 18 months as handover time. "It should not be longer because the way things work, there would be tremendous pressure to unseat that person. It should be stated and that person should become known for filling the position and not just waiting in the wings. I know what happened in my case."
Recounting the early days of Ratan Tata at
the helm of affairs, the book said that he had assigned himself the target of consolidating the group, as a first step for which Tata Sons slowly started hiking its share in each group firms to 26
per cent as it had fallen over the past decades. "We set ourselves the task of seeing how we could put ourselves together as a more meaningful and recognisable group of companies with more central control".
Ratan Tata, who would be retiring as chairman in December 2012, is quoted as saying that these efforts were "resisted with great vigour" by member companies.
The book by Morgen Witzel noted that the process was a very delicate one and the prickly, autocratic chairmen of the member companies had to be handled carefully.
As per the book, Tata Sons made its wishes known and gradually persuaded the reluctant boards that it was in their best interest to work together and return to the old model of
collaboration.
As Ratan Tata is quoted in the book, "over time, there has been a fair amount of convergence". Today, Tata group is the wealthiest conglomerate in India in terms of market
capitalization of listed entities at Rs 3.7 lakh crore followed by Mukesh Ambani led Reliance group.