Tata Sons chairman Cyrus Mistry has begun to form his management team to lead Indias largest industrial group.
The holding company of the group Tata Sons announced on Tuesday the formation of the Group Executive Council to function directly under the existing board of the company to provide strategic and operational support to the chairman.
The council,headed by Mistry,will now be the key executive decision making body for the Rs 475,721 crore revenue earning (2011-12) conglomerate,stepping in as board members in all key Tata companies including TCS,Tata Steel,Tata Motors and Indian Hotels.
The first three appointees to the council are NS Rajan,Mukund Govind Rajan,and Madhu Kannan. Other appointees to the GEC will be announced in due course, stated a release issued by Tata Sons on Tuesday. A group source said the number of members are unlikely to be more than six,the same number as the Tata Sons board now has.
The Indian Express had first reported the story on the formation of the two-tier board on April 2,2013,Tata Sons considers 2-tier board for continuity during transition.
Under the dual structure,the Tata Sons board will continue to function but in a non-executive capacity. All the five executive directors on the board are due to retire over the next couple of years moving into non-executive capacity as per the policy of the group. In 2011,the retirement age for executive directors in Tata companies was set at 65 and that of non-executive directors reduced to 70 years from 75.
The controlling stake in the 100 operating companies of the group straddling seven business sectors,including communications and information technology,engineering,materials,services,energy,consumer products and chemicals is held by Tata Sons.
The executive council will accordingly have the power to decide on the key decisions of the major companies under Mistry.
Members of the GEC will be assigned responsibilities by the chairman of Tata Sons,lead various strategic functions besides also serving as nominees of Tata Sons on the boards of Tata companies,the company release said. It will own and drive the delivery of the core purpose of Tata Sons,which is long-term value creation for all stakeholders assuming all the roles performed by the Group Corporate Centre and the Group Executive Office.
The formation of the council is similar to the way Mistrys predecessor Ratan Tata had assumed effective command of the 145-year-old group in the early nineties,by raising the profile of Tata Sons. He had cut down the then existing system where each company chief was largely left independent to decide on his policies and budget.