Tata stocks take Rs 10,700 crore hit

The unceremonious exit of Tata Sons chairman Cyrus Mistry shaved off nearly Rs 10,700 crore from key Tata group companies in combined market capitalisation on Tuesday even as the interim chairman Ratan Tata tried to calm frayed nerves through a letter to employees.

On Tuesday, shares of Tata Steel fell 2.51% and Tata Power, 1.5%, on BSE. Tata Consultancy Services (TCS) shares slipped 1.20% and Tata Motors went down 1.07%. During the morning trading session, these stocks had lost up to 4.2%, but recovered before the day's close.

Tata in his letter to employees talked of his role of providing "stability of and reassurance to the Tata group" till a new leader is selected.

He also met group CEOs at Bombay House and assured all of a stable environment. He said the group companies will see continuity in their strategies and assured them that Mistry's exit is not a cause of concern for the group. Tata assured CEOs that the long-term interests of the group would get priority.

"The companies must focus on their market position vis-à-vis competition, and not compare themselves to their own past," Tata told managing directors and senior leaders of Tata companies, urging them to become leaders and not followers.

The message was loud and clear: There is an urgent need to change the way the group was navigating its way in recent times and that leadership strategies were sorely missing as the companies within the Tata Group lumber their way through the turbulent sea of global uncertainties.

The curt 25-minutes meeting, which took place during early office hours, ended with the key message: "An institution must exceed the people who lead it."

Ratan Tata and Cyrus Mistry are studies in contrast.

While the group grew at a breakneck speed with turnover rising from $1.5 billion in 1991 when he assumed charge to $100 billion in 2011-12 when he retired, fuel mainly by some audacious acquisitions beginning from tea brand Tetley of UK to European steelmaker Corus and marquee automobile brands like JLR.

It was not all inorganic growth as the TCS story showed, turning into a jewel in Tata Group's crown, its largest profit maker alone accounting for $10 billion in revenue.

Things changed under Mistry and it was time for consolidation and sell-off.

Blame it on the continued global economic slowdown and aftershocks of some steroid induced growths, Tata Groups stopped growing under Mistry's leadership the way it did earlier.
Ignoring out the freaky returns generated by some of the smaller listed entities of the group (and there are quite few) like Tata Metaliks, which is actually a subsidiary of Tata Steel, the jewel in the crown, TCS just gave a return of 89% since 2012 going up from Rs 1,130 to Rs 2,398 now.

Indian Hotels, which reported a loss in the June quarter, managed a better return of 99% rising from Rs 62 to Rs 125.

The biggest gainer has been Voltas under Mistry's tenure, giving a return of 278%, now ruling at Rs 397.

Despite a struggling domestic business, Tata Motors, now quoting at Rs 554, returned 78% to shareholders during this period thanks to extraordinary performance of Jaguar and Land Rover.

Tata Chemicals showed a decent performance appreciating 62%.

The stocks that depreciated since 2012 were Tata Steel (3%), Tata Power (24.58%) and Tata Global Beverages (6.5%).

As Cyrus tried unsuccessfully to dispose of Tata Steel's UK business, Tata Global Beverages failed to come up with any winning brand even as Tata Power profits continued to slide.