OREANDA-NEWS. T V Narendran has emerged the surprise choice for the post of managing director (MD) of Tata Steel, after incumbent H M Nerurkar retires on October 31. Narendran, currently, vice-president (safety and flat products), will take over as MD, India and Southeast Asia, on November 1.

At 48, Narendran will be the youngest MD Tata Steel has ever had. Narendran, inducted as an additional director, was being groomed for the top job, according to officials close to the development.

New leadership structure

The appointment is part of a new leadership structure announced by Tata Steel, in which Group Chief Financial Officer Koushik Chatterjee will become group executive director (finance and corporate).

He will report directly to Tata Sons Chairman Cyrus Mistry, with Karl Koehler, managing director and chief executive, Tata Steel Europe, and Narendran.

“By elevating Narendran, Tata Steel has continued with its tradition of giving leadership roles to executives with operational experience,” said a management consultant who advises Tata Group companies. “In the steel business, importance of operations cannot be undermined. Besides, Narendran will bring his relations with supplier, customers and labour to the table, which is crucial for the company,” he added.

Narendran joined the company in 1988 after completing his MBA from IIM-Calcutta and worked in various capacities in Dubai for a few years in the exports division; steered NatSteel (Tata Steel's first foreign acquisition in 2004) as managing director; and then came back to work in Kolkata as head (marketing and sales) of the money-spinner flat products.

A company observer said: “From exports to market development to business planning and supply chain restructuring, he has done it all.” Narendran has also worked as principal executive officer under B Muthuraman, when Muthuraman was the managing director.

Koushik Chatterjee was elevated to the Tata Steel board in November 2012 and was believed to be in the fray for the managing director's post. Chatterjee will report to the chairman and board of Tata Steel.

Observers said Chatterjee could go on to play a bigger role in the group. There has been speculation about Chatterjee succeeding Ishaat Hussain as director (finance), Tata Sons.

Chatterjee will also be responsible for Tata Steel group corporate functions, including legal and regulatory affairs, corporate communications, strategic procurement, information systems, group investments, global mining projects and assurance.

“The board has put in place appropriate governance process to ensure a smooth transition of leadership,” a company statement said.

Analysts tracking the company said challenging times were in store. Though Tata Steel posted a profit in the past quarter, its fortunes have see-sawed with steel prices, primarily because the European operations that accounted for 60 per cent of the revenue didn't have raw material resources.

Moreover, the company is also expanding capacity in India. It is setting up a new project at Kalinganagar in Odisha.