The sudden dismissal of Cyrus Mistry as chairman of the board of Tata Sons has led to much speculation about why he was ousted. Reports in the Indian media mostly centre on the belief that the group’s board had become unhappy with Mistry’s initiative of downsizing the conglomerate by aggressively disposing of unprofitable businesses.
Tata Sons’ returning chairman, Ratan Tata, says he has instructed a selection committee made up of himself and other board members to find a replacement for Cyrus Mistry within four months. During the interim period, Tata will head up the group, thereby returning to the role he had handed to Mistry in late 2012. The selection committee comprises Ratan Tata, Venu Srinivasan, Amit Chandra, Ronen Sen and Lord Kumar Bhattacharyya.
The group is yet to give specific details as to why its chairman was sacked, a company spokesperson telling the media that the decision was “…in the long term interest of all shareholders”. The board’s issued statement noted that it was decided, “it may be appropriate to consider a change for the long-term interest of Tata Sons and Tata group.”
Analysts claim the disposal of some of Indian Hotels Company’s overseas properties, combined with the decision to shut Tata Steel’s UK operations, did not go down well with leading shareholder Tata Trusts. Another recent controversy centred on a very public legal battle between Tata Telecommunications and its partner NTT DOCOMO, instituted by Mistry. This is said to have caused particular annoyance to Ratan Tata. The telecommunications division has had to settle with NTT Docomo at a cost of what will likely be US$1.2bn.