In a sudden and dramatic turn of events that took corporates and others by surprise, Tata Sons board announced the ousting of its chairman Cyrus Mistry, but gave no reason for it, also paved way for return of Ratan Tata as interim chief
ADVERTISEMENT
In a sudden and dramatic turn of events that took corporates and others by surprise, Cyrus Mistry was yesterday sacked as Chairman of India’s largest conglomerate Tata Group. To rub salt on the wound, his predecessor Ratan Tata replaced him in the interim, triggering a possible confrontation between the single-largest shareholder and the company’s founding family.
In the surprise development, the board of Tata Sons, where 66 per cent shares are held by philanthropic trusts endowed by members of Tata family, ousted Chairman Mistry saying it was acting “for the long-term interest” of the firm. However, no reason was given for removing Mistry who was brought in less than four years ago with much fanfare, but it is believed there were differences over management style and his approach of selling assets after writing them down.
Read Story: Ratan Tata returns as Tata Sons chief in place of 'sacked' Cyrus Mistry
“Tata Sons Board met today and decided to replace him as Chairman with immediate effect. The Tatas Sons board in its collective wisdom and on the recommendation of principal shareholder decided that it may be appropriate to consider a change for the long term interest of Tata Sons and the Tata group,” a Group spokesperson said.Also, there will be no change at the level of CEOs in the operating company, he said.
Who is Mistry?
Born on July 4, 1968, Mistry completed his graduation in civil engineering from London’s Imperial College of Science, Technology and Medicine and followed it up with a masters in Management from the London Business School. he began working for the group controlled by his father, billionaire Shapoorji Pallonji Mistry, in 1991.
Committee appointed
The board named a five-member search committee, which includes Tata, along with TVS Group head Venu Srinivasan, Amit Chandra of Bain Capital, former diplomat Ronen Sen and Lord Kumar Bhattacharya, to choose a successor within four months.
Mistry’s family terms sacking illegal
Mistry’s family firm Shapoorji Pallonji Group, which has 18.4 per cent in Tata Sons —the holding company of $100-billion salt-to-software conglomerate, will be fighting the “illegal” removal, adding that the decision to remove Mistry was not unanimous. This was confirmed by senior lawyer Mohan Parasaran. Out of the nine board members, 8 members voted, wherein six voted for Mistry’s ouster and two abstained. It also alleged that the board’s issue was more to the fact that it felt Mistry ran a one-man show.
Read Story: Cyrus Mistry to succeed Ratan Tata
Meanwhile, anticipating trouble, it is being reported that Tata Sons has enlisted the professional services of senior advocates Harish N Salve and Abhishek Manu Singhvi.
As part of its due diligence, the group also held legal consultations with former Supreme Court judge RV Raveendran, and senior advocates P Chidambaram and Parasaran, sources said.
Challenges he faced
Steel: Earlier this year, Tata Steel Europe completed selling of European long products business — three units the UK as well as a mill in France to Greybull Capital. Announced plans to sell UK operations after years of losses, but yet to finalise sale.
Hospitality: In July, Indian Hotels Company Ltd (IHCL), which runs Taj Group of hotels, completed sale of Taj Boston hotel for $125 million (about R839 crore). Also sold off 12.7 lakh shares of Belmond for $11.96 million.
Telecom: The Tata group is also engaged in a legal battle with Japan’s NTT DoCoMo over the split of their telecom joint venture Tata Docomo.
Auto: The domestic automobile business, despite accounting for roughly half of India’s trucks business, has long been under strain.
Timeline
2006: Joins Tata Sons board
November, 2011: Mistry, who was part of the panel tasked to find a successor to Tata, finds himself as successor. Appointed Deputy Chairman.
December 29, 2012: Succeeds Tata; takes over as group Chairman.
2012-2015: Faced many challenges in both domestic and global markets. Undertook a strategy of divesting assets. Meanwhile Titan, Tata Global Beverages, Indian Hotels, Trent, and Rallis India better but collective operating profit grown only 4% CAGR in the past five years.
April 2016: Nine of the 27 listed companies in the group reported losses and the earnings of seven others dropped
June 2016: NTT DoCoMo of Japan secures $1.2 billion arbitration award
October 24, 2016: Board announces his sacking, replaces him with his predecessor Ratan Tata.
66%
Equity held by trusts endowed by Tata family members
78
Ratan Tata’s age as he returns as interim chairman
100
Companies in the Tata Sons fold Tata family members
Rs 103 BN
Tata Sons revenue for FY15-16
Rs 108 BN
Revenue for FY14-15
Subscribe today by clicking the link and stay updated with the latest news!" Click here!
