In a dramatic development, the Tata Sons board on Monday sacked Cyrus Mistry, less than four years into his term at the helm of the software-to-steel conglomerate. The board gave no reason for the abrupt removal of the 48-year-old Irish citizen and named his predecessor Ratan Tata, 78, as interim chairman.
“The board in its collective wisdom and on the recommendations of the principal shareholders took a decision to ask him to go,” a spokesperson, who did not wish to be identified, said. “The board decided that it may be appropriate to consider a change for the long term interest of Tata Sons and the Tata Group.”
Mr. Mistry, who had earlier headed the Shapoorji Pallonji Group’s construction business, had been considered by some analysts to be struggling to lift the large and diverse conglomerate’s financial performance. Emblematic of the difficulties were the decision to divest the flagship Tata Steel’s struggling U.K. steel assets — the company had acquired Corus Plc in 2007 for $13.1 billion — and the inability to resolve a bruising corporate-divorce with Japan’s NTT DoCoMo.
While two of the group’s bluechips, Tata Consultancy Services and Tata Motors outperformed the benchmark BSE Sensex during Mr. Mistry’s 46-month reign appreciating as much as 92 per cent and 81 per cent respectively, four other key group companies underperformed.
Tata Trusts, the principal shareholder of Tata Sons with a 66 per cent stake, had not been impressed with Mr. Mistry’s performance, said a person with knowledge of the developments, who did not wish to be named. The perception was that Mr. Mistry had tried to undo several initiatives taken by Mr. Tata. “The feeling among the Tatas is that the group is precious and that not everybody can fit into it,” a former Tata group senior executive, who did not wish to be identified, said.
Tata Sons has set up a selection committee comprising Mr. Tata, industrialist Venu Srinivasan, Ronen Sen, Amit Chandra and Lord Kumar Bhattacharyya and the panel has been given four months to pick a new chairman. “There is no change at the level of CEOs of the Tata Group companies,” the spokesperson said.
The Shapoorji Pallonji Group, which has 18.4 per cent in Tata Sons, is believed to be considering a legal challenge to Mr. Mistry's removal as chairman.
Who is Cyrus Pallonji Mistry?
Mr. Mistry was the sixth chairman of the group and the only the second chairman who did not carry the Tata name, after Nowroji Saklatwala. >Read more
