00:00Tata Group shares will be in the spotlight when trading in India begins later on this hour.
00:04Group companies wiped out $4.5 billion in market value on Wednesday.
00:09This is after Chairman N. Chandrasekharan announced that he won't be seeking reappointments upon completion of his term.
00:16Let's get a bit more on this story with Kavil Ramachandran,
00:19an expert on Indian entrepreneurship and family businesses at the Indian School of Business.
00:25Ram, thank you so much for joining us today.
00:28Now, we did have Sanjay lay out the background for us there.
00:32What does this look like to you?
00:35Why the demand from Chair Chandra that there be unanimity around him for the chairmanship?
00:40And why just step down because he's not getting it?
00:46Yeah, it's to me, it's a very, very shocking kind of situation which should not have happened.
00:52This is primarily because Tata has always been considered as an institution.
00:59It has evolved since Jamsharji had set it up long ago.
01:03All the leaders, all the successors have built it up together.
01:07And there are some of the key values driven by the, followed by the Tata's.
01:14One is continuity.
01:17Fundamentally, it's a stewardship, nation building, predictability.
01:22All these values have been there.
01:24And this announcement has precipitated that it has become so bad that the Tata's has lost that kind of a
01:32confidence.
01:33And that's reflected in terms of the stock market performance also.
01:37So, it's a major, major challenge for Tata's also because there are two, three key things related to this.
01:47One is that this was this, everyone thought that this would blow away.
01:53This would not get into this kind of a situation where Chandra would put in these papers.
01:59And this is really shocking.
02:02What is this going to mean for succession then at Tata in terms of who is the chair?
02:08And, you know, particularly now that this AGM is supposed to be happening in five days, won't be going ahead.
02:17It's going to be tough.
02:19I mean, to me, there are multiple reasons, factors involved.
02:24One is the regaining the confidence of the multiple stakeholders.
02:28It's not the shareholders because Tata has always been a service-oriented society, controlled, trust-based organization.
02:38So, and also there are multiple stakeholders.
02:41It is a highly diversified conglomerate and everyone has faith in this, belief in this.
02:47Many people work for this or associate with Tata's because of the trust issue principle.
02:53It has always followed.
02:54And regaining that kind of a confidence is not going to be easy because this is, Tata has never been
03:02considered, say, sort of a typical family business with feuds inside and the owner-driven kind of purpose.
03:11No, this has been professionally managed throughout.
03:14So, regaining that kind of confidence is not going to be so easy.
03:18That's one.
03:20Second is that succession is not an event.
03:23Succession is a process.
03:25And succession, especially for, again, an organization which is driven by two key dimensions.
03:33One is the business performance, economic performance, financial performance.
03:37That's one part.
03:38The second is the values.
03:41And always, I mean, right through Jamsharji, Jayardhi or Taten Tata's time or even when they look for Chandrasekhar in
03:50between, Cyrus Mistry came.
03:52And there was also questions about his commitment to the Tata values that led to the conflict between Taten Tata
04:00and Cyrus Mistry and his exit.
04:02So, when we know all these things, finding a successor is, one is that finding a successor is not easy.
04:10Cyrus' time, it took long.
04:13Chandrasekhar's time, it took long.
04:15And it's not going to be easy.
04:17That's one.
04:17Second is that even if we find somebody, will there be somebody who is interested in stepping into this role,
04:25especially this time?
04:27And there are two different factors.
04:28One is that the external environment is turbulent.
04:32And whether you take geopolitical technology or market conditions and everything is boiling.
04:39And it's a stormy water.
04:41You don't change the captain of the ship when the ship is in the rough waters.
04:48And that is very important.
04:50Finding somebody who is capable.
04:51You don't change the captain of the ship.
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