How Did Ratan Tata Use “Retirement” Trump Card In Taking Control Of Tata Group

After taking the baton from JRD Tata in 1991, Ratan Tata was instrumental in reshaping the Tata group via major changes in retirement policies. Here's an overview:

At age 54, Rata Tata was entrusted with the chairmanship, and he faced several challenges from the senior leadership, which included Russi Mody, Ajit Kerkar, and Darbari Seth. During the journey, when his authority was challenged, Tata introduced a slew of reforms, including changes in retirement age policy. These policies aimed at overhauling the system.

In 1992, Tata implemented a retirement policy wherein directors were mandated to step down at 75. The moves drew flak. However, Mody, who dedicated 53 years to the company, was forced to retire in 1993. Interestingly, a year before his retirement, Mody chose to promote his adopted son Aditya Kashyap as the deputy MD without the approval of Tata Steel’s board. Later on, Tata disapproved of this unilateral decision, prompting Mody to withdraw the promotion. Kashyap departed alongside Mody.

Darbari Seth bid adieu from Tata Chemicals and Tata Consumer Products in 1994. But, a year before his retirement, he managed to appoint his son, Manu Seth, as the MD of Tata Chemicals. However, due to "differences in professional perception", Manu’s tenure was short-lived, prompting him to quit in 2000.

Ajit Kerkar served as the Chairman and MD of Indian Hotels (Taj). However, he refrained from Tata's management style. Finally, in 1997, Kerkar was forced to retire after the group accused him of violating foreign exchange laws.

Interestingly, the rejigs in the retirement policy was not a one-time solution, it paved the way for a series of strategic changes that aimed at bolstering Tata’s authority over the Tata empire.

Notably, in 2000, the Tata Group placed a cap on the retirement age for non-executive directors to 70, but in 2005, the age was again increased to 75, which in turn allowed Ratan Tata to extend his chairmanship until 2012. Interestingly, just before a year of his retirement, the age was again changed to 70. This move evoked questions about the motives behind such shifts in policy.

However, in 2016, Tata Sons turned the tables by eliminating the age limit for the nominees of Tata Trusts, which is the company’s largest shareholder. This move saw Tata taking a back seat into a leadership role as interim chairman of Tata Sons, which in turn proved to be beneficial in removing Cyrus Mistry from the position.