From decision to sell assets, aggressive approach, iron-hand style, underperformance of group companies, to his inability to take the group to a higher level, reasons for Cyrus Mistry's exit is everybody's guess
It was around 4.50 pm on an otherwise quiet Monday, when Tata Group, India's largest conglomerate, shocked India Inc with the news of a coup. In a terse communique, Tata Sons announced that its board, which met in Mumbai, replaced Cyrus P Mistry as its chairman and named his predecessor Ratan N Tata as interim chairman. Nobody had a hint.
In a departure from the Tata tradition, the communique didn't have the customary word of appreciation for the chairman who stayed at the helm for nearly four years, since December 28, 2012.
It is likely that Mistry will continue on the 11-member Tata Sons Board.
In a letter to Tata employees, Ratan Tata, interim chairman of Tata Sons, said the Board has replaced Mistry as chairman with immediate effect. "In the interim, the Board has requested me to perform the role of the chairman and I have agreed to do so in the interest of stability of and reassurance of the Tata group," he said.
A top official from Shapoorji Pallonji Group, led by Cyrus Mistry's father Pallonji Mistry, told DNA Money that he was shocked. "The current problems faced by the Tata Group are not his creation. They were all inherited by him," he said.
According to him, Cyrus never existed from the Shapoorji Pallonji Group. He owns an equal 50% stake in group companies along with his brother Shapoor Mistry. Ït is just that Shapoor was taking care of the businesses as Cyrus took charge at Tata," he said.
Many believe that his tough decisions, including those to sell some Tata companies, led to friction with the Tata Trusts, which own two-third of Tata Sons. Shapoorji Pallonji Group owns 18.5% stake in Tata Sons.
A senior executive of a Tata company, who spoke on condition of anonymity, said what was being speculated internally post Mistry's exit is that it could be his aggressive approach and iron-hand style of operating and decision-making which could have made him fall out with Tata Trusts.
"During Mistry's tenure, (the unwritten) Tata code was not being followed in true spirit. Earlier, even when there was aggression, there was passion and things were given time to happen. There was lack of commitment to follow through things undertaken. There was little patience in seeing things through," he said.
In last four years, one distinct change that came about was that from being run professionally, the group was being run like family-run company, according to him. "Earlier all decisions were taken by a team or group of people but lately we were seeing many individual-driven decisions being taken," he said.
Some others cite underperformance of group companies and his inability to take the group to a higher level as prime reasons for Mistry's exit.
One senior executive felt that Mistry's realty background was not enough to manage a conglomerate which is present in almost all sector from a "pin to aviation".
"His experience of realty was very limited to manage a group which is into manufacturing and services in almost all sectors from salt to software," said one of Tata's top management guys.
"At this point, it is difficult to say what exactly was the reason but underperformance cannot be the reason. Four years is too short a time to show any result or evaluate performance of someone heading a conglomerate as big as the Tata Group," he said.
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