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Rakesh Sarna Quits as Taj Group MD & CEO

Announces his departure after closing FY 2016-17 with impressive profit after tax; names of Ajoy Misra, Zubin Dubash floating as probable successors.

Photo Credit :


Cyrus Mistry brought in Rakesh Sarna (above) to replace Raymond Bickson even before the then Taj Group MD and CEO could complete the first year of a five-year extension granted to him by the board.

WHEN I LAST reported that Rakesh Sarna had been asked to relinquish his position as Managing Director and CEO of the Indian Hotels Company Limited (IHCL), which owns the Taj hotels, people had commented that he would survive the purge that followed the sacking of Cyrus Mistry, the man who hired him, as Tata Sons Chairman, and emerge stronger than ever.

Today, the IHCL Chairman, N. Chandrasekharan (who is also Tata Sons Chairman), reported to the Bombay Stock Exchange (BSE) that Sarna had expressed his desire not to continue in his position after his three-year contract comes to a close on September 30, 2017. The announcement came a month after the resignations of two important members of the IHCL board of directors, Shapoor Mistry (Cyrus's elder brother and Chairman, Shapoorji Pallonji & Co.) and K.B. Dadiseth -- both hard-hitting critics of Tata Sons supremo, Ratan Tata. Was a purge on, away from the glare of the media spotlight?

Ironically, Sarna, who had been buffeted by sexual harassment allegations (he was exonerated just two months ago) after being ushered in as the second highest paid Tata executive, has just delivered the best financial result for the company in his three-year stint. According to an IHCL media release issued today (May 26), the company's Revenue from Operations rose to Rs 2,391 crore in FY2016-17, compared with Rs 2,268 crore in the previous year. The Operating EBITDA was also up -- Rs 521 crore, compared with Rs 422 crore in the previous year. And the Profit after Tax entered triple-digit territory, Rs 142 crore, compared with Rs 84 crore in FY2015-16, despite the Rs 103 crore loss entailed in the sale of Taj Boston.

Sarna's exit makes his tenure the shortest among those who have headed the Taj Group (his predecessor, Raymond Bickson, was around for seven years), and comes at a time when the Taj Group is in the middle of implementing his ambitious Tajness programme, which has led to the group exiting from three Gateway Hotels -- Khajuraho, Hubli and Raipur -- as these were no longer of strategic importance to the business, and is on the backfoot in the Taj Mansingh case, with the Supreme Court allowing the New Delhi Municipal Council (NDMC) to auction off the New Delhi landmark.

FY2016-17 also saw the openings of Taj Swarna (157 rooms) in Amritsar, a Gateway (52 rooms) in Corbett and a Taj Safari at Chitwan (Nepal), and two Ginger hotels in the budget category. The company has also announced that it will open Taj Andamans (75 rooms), Rishikesh (79 rooms), Shimla (95 rooms) and Tirupati (102 rooms), and seven more Ginger hotels with 520 keys in all.

What, then, led to Sarna quitting IHCL? Had the sexual harassment case singed him and he was waiting till he was cleared of the charges brought against him? Or did Ratan Tata and he, as was rumoured in the market, not agreeing on IHCL grouping all its hotels globally under a single branded house identity called Taj Hotels Palaces Resorts Safaris? The brands Vivanta by Taj and Gateway are to merge under this single Taj brand identity and each of the four groups -- Taj Hotels, Taj Palaces, Taj Resorts and Taj Safaris -- will have clearly defined experiences.

The truth is somewhere in the realm of speculation. But, even before the dust settled on the news about Sarna expressing his desire not to continue in his office after September 30, punters started speculating on his successor.

Would Tata again go head-hunting around the world, or appoint someone from his stable? Ajoy Misra, a former Taj executive who now heads Tata Beverages, seems to be favourite of the punters. Another name that has come up is that of Zubin Dubash, a former Tata executive reputed to be a financial wizard, who's now the Executive President and Director of ATC Tires & Co. (an Alliance Tire Group company) and Group CFO of WNS Global Services. Or will the top management go against its own hiring tradition by elevating a seasoned hand like Farhat Jamal or Rohit Khosla to the top?

Well, it's that season again! The Taj Group is back in the news -- and bang in the centre of a whirlpool of speculative theories.

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Rakesh Sarna taj hotels tata group