Decoding the TATA 'Mistry'
- In Current Affairs
- 01:39 PM, Nov 07, 2016
- Ranabir Bhattacharyya
The removal of Cyrus Palonji Mistry as Chairman of the Tata group of companies has been the center of debate in India and world over. This decision of the Tata group which is now a $103 billion conglomerate is certainly going to have huge implications in the coming days. Although, Ratan Tata, the interim Chairman of Tata group has assured of swift functioning of administrative domain of Tata group, there has been element of doubt regarding the ouster of Cyrus Mistry, son of Palonji Mistry who is the owner of Shapoorji Pallonji group. Shapoorji Palonji group is the biggest stakeholder in the Tata group. Cyrus Mistry was appointed the Chairman of the Tata group in 2012 and Corporate India hailed it to be an interesting choice looking at the rich legacy of the Tata group.
The decision of Tata Group to remove Mistry has been the talking point as the interim chairman of Tata group; Ratan Tata himself has moved to file caveats in Bombay High Court. There have been rumors going around that Tata group is consulting top notch lawyers to fight their case. Cyrus Mistry has categorically said that the whole process of his ouster has been secretive, inappropriate and illegal.
Six decades after Indian independence, the Tata group stands as a supreme entity in the global business domain. From Airways to Telecom sector, the presence of Tata in almost all sectors of modern industries makes it one of the most globally recognized Indian brands in the world. As far as their recent acquisitions and investments are concerned, there have been significant questions raised about their strategic value. In any case, under the Cyrus Mistry's leadership, total market capitalization of Tata increased from Rs 4.5 lakh crore to Rs 8.6 lakh crore in five years. Cyrus Mistry had no other option but to carry on with ailing Tata Steel, Tata Chemicals, Tata Power and even Tata Teleservices.
There have been so many issues which can be looked upon as possible reasons of Cyrus Mistry's ouster from the top post. First, the financial health of Tata group has not at all improved in the last few years. Apart from Tata Consulting Services (TCS) and UK based Jaguar Land Rover, the Tata companies aren't performing up to the mark and adding negative values to the brand in the long run. The case of Tata Steel needs to be looked at closely. Recently, they had to sell offload assets in UK with a consistent slump down in prices. Decision making has also been a core aspect in which the Cyrus Mistry era had to suffer a lot. Whether Ratan Tata himself played the spoilsport or not is a different issue, but the $1.2 billion huge expenditure in arbitration to the Japanese group Docomo has been an ulcer in tougher times.
There has been considerable difference in the investment outlooks of Ratan Tata and Cyrus Mistry. In Ratan Tata's era, the focus was to give a global image to the Tata group, which further necessitated the acquisition of steel, beverages and automobile companies in Europe. But Cyrus Mistry mostly looked to be comfortable in his own arena and didn't at all follow the investment footsteps of Ratan Tata. Cyrus Mistry's displeasure over Ratan Tata's misadventure also didn't help the internal turmoil within the Tata management. Cyrus Mistry is said to have been worried regarding the PIL filed by Subramanian Swamy, which can further embarrass the Tata group with the illegalities regarding the Air Asia venture. Same thing can be said regarding the Singur - Nano project. After the landmark judgment in the Singur case, it is indeed clear that the Tata stance in the land acquisition in Singur – Nano project was dubious. The company was incurring much losses in the 'one-lakh' car gimmick. Cyrus Mistry, like a seasoned tactician, just couldn't reason some of Ratan Tata's investments, which were mostly driven out of sheer emotion and brand image. Even though Ratan Tata remained Chairman of the Trust, he didn't have much coordination with Cyrus Mistry, the Chairman of the Tata Sons.
From being a Deputy Chairman to a Chairman, and then getting ousted unceremoniously- the whole Cyrus Mistry is certainly a blot to Tata's image. The Tata group is not simply a business conglomerate but also an iconic venture which Indians have an emotional attachment to. Ratan Tata, back at the helm of powers, Tata group seems to be lacking or failing to come up with a new leader or a modern entrepreneur. It would indeed be unfortunate if Tata group gets entangled in long term legal hassle with Cyrus Mistry and there are further delays in coming up with a new face in the hierarchy. At present, Tata group needs renewed zeal and vision to proceed in the stiff competitive market, where Indian companies and those from abroad are well equipped with swift managerial and management skills and adept decision making framework.
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