Chairman Ratan Tata outlined a detailed plan on how each company should handle the change at a meeting of group chief executive officers on August 17.

The restructuring will begin with the setting up of business-review committees of each group company. The committees, which will be chaired by Ratan Tata, will comprise directors of each company, and at least three directors from other group companies -- say, a Tisco and Tata Tea director could be involved in the committee on Indian Hotels.

It is learnt that the committees will meet once every three months. Each of the committees will draft a business plan, keeping in view the medium- and long-term goals of each company. These will be placed at the first round of meetings scheduled for November this year.

The objective in setting up the committees is to oversee how the business plan is implemented. The outside directors who will attend these meetings are expected to share their experience and expertise in the recast exercise.

It is learnt that the group intends to stay only in those businesses where it is the leader, or not too far away from the leading player. The next two years, are, thus, likely to see the group exiting from several fringe businesses.

The group had earlier appointed international management consultants McKinsey & Co for working out the recast plan, which was submitted to the Tata Sons board last November.

The report is expected to work as a broad guideline on how to recast the group operations. It is, however, still unclear to what extent McKinsey's recommendations will be adhered to.

Speculation has been rife over the last one year that the group's core businesses will be pruned down from about 25 to 10-12, while the number of companies could also be reduced by a third. It is, however, now understood that pruning through mergers may not be financially viable, at present, because of the high stamp duty.

A simultaneous exercise, which may be announced soon, is the launch of the new Tata logo and brand-equity fund, meant to promote the group's common identity.

Ratan Tata, meanwhile, has initiated the task of developing a core team to direct the group's future plans. Hindustan Lever former vice-chairman R Gopalakrishnan and Tisco executive director Ishaat Hussain are part of the core team.

Another inclusion is that of Manab Bose, former GE India human resources development (HRD) chief, who has joined the group as HR director, Tata Industries. Bose is expected to work on the group's new HR policy.

The recast is expected to conclude with a management restructuring at the group's holding company, Tata Sons. The Tata Sons board comprises contemporaries of JRD Tata, the former chairman, most of whom are now well over 75 years of age.

Although some of them have evinced stepping down from the board to make way for the younger generation group directors, Ratan Tata is believed to be of the firm opinion that they remain till the entire restructuring is through.

INSIGHT

Change for the better

Recession has taken a toll of the country's two most prestigious business houses--the AV Birla group and the Tata group. Both have responded by announcing their plans to restructure and, in fact, already begun the process. The Tata group saw an unprecedented stepping down of senior managers, who made way for the younger generation. The AV Birla group, which had strongly believed in "service till death", caught many unawares when it announced a formal retirement policy for its executives.

A business reorganisation, specially for the Tata group that has in its fold over 100 companies, was long overdue. It is a good sign that the group has finally woken up to the stark market realities and is taking steps to redress the damage done to itself, by making the mistake that most leading enterprises have made -- not reacting to a changing external business environment. Its not too late yet, as established leaders often cover lost ground far quicker than emerging ones.