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In a significant development that ends the prolonged speculation about the succession in India's leading corporate house Tatas virtually extended the term of group Chairman Ratan Tata till 2012.
The holding company Tata Sons of the over Rs 75,000 crore (Rs 750 billion) group, decided at a recent board meeting to raise the retirement age of non-executive directors from 70 to 75, thus potentially extending Ratan Tata's tenure up to 2012.
Ratan Tata to step down in 3 years
The 68-year-old Tata retired as executive chief and started functioning as non-executive chairman since 2002.
However, the option to continue beyond the age of 70 would be with Ratan Tata as per the guidelines approved by the board on retirement.
When contacted, a Tata spokesperson said that 'the board of Tata Sons has adopted revised guidelines for the composition of the board of directors,' and added that accordingly the 'retirement age for non-executive directors has been reverted to 75 yeas.'
"This allows the company to continue to benefit from the rich experience of these directors, who add great value to the strategy and direction of Tata group companies," he said.
Prior to this decision, Rata Tata was slated to retire in 2007, generating speculation about his successor with many names, including that of Noel Tata.
Tata Sons Board, which includes N Soonawala, Ishat Hussain, R Gopalakrishna, J J Irani and R K Krishan Kumar besides others, however, kept the retirement age unchanged at 65 years for executives and whole time directors.
The decision virtually bears the stamp of appreciation and approval for the leadership of Ratan Tata under whose leadership the group became the single largest private corporate house with a market capitalisaton of over Rs 140,000 crore (Rs 1,400 billion) and embarked on a major acquisition spree.
Last year Tatas acquired Nat Steel in South Africa, an undersea cable company Tycon and Korean auto giant Daewoo's truck manufacturing facility. The group also announced major investment initiative in Bangladesh totalling $2 billion. These initiatives made Tatas an Indian multinational.
Ratan Tata had recently resigned from a group company Videsh Sanchar Nigam Limited as chairman with a view to oversee the entire group's operations.
The decision to extend the retirement age assumes significance as the group has forayed into international market recently in a big way especially in areas like steel and expertise of Ratan Tata was being considered crucial to lead the group.
Tata Sons has circulated the revised guidelines to the boards of Tata companies for their consideration.
According to sources the revision in guidelines would help group companies in retaining talent which could have been lost due to the age limit.