Roshni Nadar\'s appointment: Change\, but no change at HCL Tech

Roshni Nadar's appointment: Change, but no change at HCL Tech

Roshni's appointment does not change anything for HCL Tech. The signal is clear - chairmanship role stays with the family while operational or executive roles could be donned by outsiders

Rukmini Rao | July 17, 2020 | Updated 22:55 IST
Roshni Nadar Malhotra

India's third largest IT firm HCL Technologies announced a change in its chairmanship with 75 year old Shiv Nadar, founder and chairman of HCL Enterprise, passing the mantle to his daughter Roshni Nadar Malhotra. A move that market watchers say was bound to happen but a process having hastened in these uncertain times. Roshni will now lead the company as its non-executive chairperson. Being the only child of Nadar, Roshni joined the board of HCL Technologies or HCL Tech in 2018 and has not worked in an operational role. However, she has been overlooking philanthropic work of the Shiv Nadar Foundation especially on the education front.

Founder of Sampark Foundation Vineet Nayar, who worked with Shiv Nadar for over two and a half decades at HCL and was also its CEO, recalls how Roshni after her return from Kellogg  chose to follow her sense of purpose. She started VidyaGyan, a leadership academy for the economically underprivileged, meritorious, rural students of Uttar Pradesh, than join her father's conglomerate. "She is a passionate human being who is interested in many facets of life. She is not a one-dimensional person," said Nayar. He further added that she was truly proud of the HCL brand and understands the legacy of her father very well.

The move is also in line with SEBI's earlier dicta to separate the roles of managing director and chairmanship in the top 500 listed companies by March 31, 2020, for better corporate governance. However, the implementation has now been deferred by 2 years and companies will now have to comply with the norms by April 1, 2022. Speaking on the board elevation, C Vijayakumar, President & CEO, HCL Tech, said, "governance and oversight will definitely be an important aspect of her role."

Roshni Nadar Malholtra's succession as the chairperson of the company however does not change anything materially on the operations side of the business. While she assumes the role of a non-executive chairperson, Shiv Nadar continues to be the managing director in the role of a chief strategy officer. Surprisingly, the company's chief executive officer C Vijaykumar leading  a $9.9 billion dollar (FY20) revenue company, which surpassed Wipro to become the third largest IT company in India, is still not a board member.

Suraj  Malik, Partner, BDO LLP, M&A & Tax  and a Succession Planning Coach says that the messaging to stakeholder is clear that chairmanship would be with the family. HCL's promoter and promoter group shareholding is currently 60.33%.  "In the context of HCL, it is a fair thing to do. People would have otherwise got confused on the power centre," says Suraj. In companies with large promoter shareholding, instead of the successor waiting to inherit the position, "it is better to have the successor groomed when the mentor is around and align the team than wait for an unfortunate event. It's the logical thing to do," he added.  

The other IT firm which saw such a change of baton from father to children was at Wipro. Rishad Premji took over as the executive chairman of Wipro relieving his father Azim Premji. However, Rishad has spent well over a decade at the company at various roles before taking over the chairmanship.