Cyrus Mistry removed as Chairman of Tata Sons; Ratan Tata is interim boss

The board has appointed Chairman Emeritus Ratan Tata as the chairman of the company for four months during with a search panel will have to find a replacement for Mistry.

Zee media Bureau

New Delhi: In a move that took the corporate world by surprise, Tata Sons on Monday removed Cyrus Pallonji Mistry as the Chairman of the company, almost four years after he took over as the rein of the USD 100 billion salt-to-software conglomerate from Rata Tata.

Meanwhile, the board members have appointed Ratan Tata as the interim chairman for four months.

#TataSons removes #CyrusMistry as Chairman; #RatanTata interim Chairman for 4 months. Search panel to look for replacement. (File Pic) pic.twitter.com/UbWbNUWsoQ

— Press Trust of India (@PTI_News) October 24, 2016

According to reports, the surprise move was taken by the Board of Tata Sons who decided to replace Mistry and appoint Ratan Tata, Emeritus Chairman, as the interim boss of the company for four months.

Meanwhile, as per PTI, Mistry's family firm Shapoorji Pallonji Group, which has 18.4 percent in Tata Sons -- the holding company of USD 100- billion salt-to-software conglomerate -- is believed to be considering fighting out the "illegal" removal.

In the suprise development, the board of Tata Sons, where 66 percent shares are held by philanthropic trusts endowed by members of Tata family, ousted Chairman Mistry saying it was acting "for the long-term interest" of the firm.

No reason was given for removing Mistry who was brought in less than four years back with much fanfare, but it is believed there were differences over management style and his approach of selling assets after writing them down.

The board has also named a five-member panel comprising of RatanTata, TVS Group head Venu Srinivasan, Amit Chandra of Bain Capital, former diplomat Ronen Sen and Lord Kumar Bhattacharya to look for a replacement of Cyrus Mistry within four months.

Panel to search for Mistry's successor comprise #RatanTata, Venu Srinivasan, Amit Chandra, Ronen Sen & Lord Kumar Bhattacharya.(File pic) pic.twitter.com/ZWWgIPtTeH — Press Trust of India (@PTI_News) October 24, 2016

Cyrus Mistry, 48, was chosen as the successor of Ratan Tata in November, 2011 and was appointed Deputy Chairman of Tata Sons, whose board he had entered in 2006. He was made chairman on the basis of his representation from Shapoorji Palonji, the largest shareholder in Tata Sons.

He took over as the Chairman of the company on 28, December 2012, the day Ratan Tata left after he turned 75 years of age.

Mistry was the sixth chairman of the group and the second not to be named Tata boss after Nowroji Saklatwala.

There were no reasons given for the change of leadership of the man who was brought in with much fanfare but it is believed that Tata Sons was unhappy with Mistry's approach of shedding non-profit businesses, including the conglomerate's steel business in Europe, and concentrating only on cash cows.

"Tata Sons today announced its board has replaced Mr Cyrus P Mistry as Chairman of Tata Sons. The decision was taken at a board meeting held here today," a Tata Sons statement said.

Tata Sons is the main holding company of the group.

CEOs at the operating company level of the group have not been touched in the rejig, company sources said.

After taking charge, Mistry had to face some challenging situations such as the decision to sell Tata Steel UK in the wake of mounting losses.

The Tata group is also engaged in a legal battle with Japan's Docomo over the split of their telecom joint venture Tata Docomo.

In an interview with an in-house magazine, Mistry had recently stated that the group "should not be afraid of taking tough decisions for the right reasons, with compassion" amid "challenging situations" confronted by some of the group's businesses that would require hard and bolder decisions on pruning portfolio.

This was in contrast to steps taken by Ratan Tata, who led the group into some notable acquisitions, starting from Tetley by Tata Tea for USD 450 million in 2000, to steelmaker Corus by Tata Steel in 2007 and the landmark Jaguar Land Rover in 2008 for USD 2.3 billion by Tata Motors.

Under Ratan Tata's chairmanship spanning over two decades (1991 to 2012), the Group's revenue grew from around USD 6 billion to USD 100 billion, driven by his expansionist strategy that included overseas purchases like tea maker Tetley in 2000 and luxury car company Jaguar Land Rover (JLR) in 2008.

But out of 100 companies under Tata Sons, only a few were profitable, with Tata Consultancy Services (TCS) and JLR clearly standing out.

Tata Steel, which bought Corus Group Plc in 2007, has been cutting operations in the UK since the 2008 global financial crisis.

Mistry, on the other hand, was looking at tackling mounting debt by raising cash, refinancing loans and selling assets after writing them down.

He was chosen as Tata's successor in November 2011, and was appointed Deputy Chairman of Tata Sons, whose board he had entered in 2006. He became chairman in December 2012 on the basis of his representation from Shapoorji Palonji, the largest shareholder in Tata Sons.

An engineer from the Imperial College of Science, Technology and Medicine in London, he began working for the group controlled by his father, billionaire Shapoorji Pallonji Mistry, in 1991.

Founded in 1868, Tata Group employs nearly 700,000 people and its 100 business include making salt, steel, leather goods, watches, tea, trucks and buses and luxury cars, developing software, generating electricity, running shopping chains, operating undersea cables and mobile telephony and owning hotels. Recent additions include defence, infrastructure and financial services.

Mistry, who was chosen by a five-member panel in 2011 to succeed Ratan Tata, took over the reins of the conglomerate when the veteran industrialist retired on December 29, 2012 at the age of 75 years.

After taking charge, Mistry had to face some challenging situations such as the decision to sell Tata Steel UK in the wake of mounting losses.

Tata group is also engaged in a legal battle with Japan's Docomo over the split of their erstwhile telecom joint venture Tata Docomo.

In an interview with an in-house magazine, Mistry had last month stated that the group "should not be afraid of taking tough decisions for the right reasons, with compassion" amid "challenging situations" confronted by some of the group's businesses that would require hard and bolder decisions on pruning portfolio.

This was in contrast to steps taken by Ratan Tata, who led the group into some notable acquisitions, starting from Tetley by Tata Tea for USD 450 million in 2000, to steelmaker Corus by Tata Steel in 2007 and the landmark Jaguar Land Rover in 2008 for USD 2.3 billion by Tata Motors.

During Tata's tenure, the group's revenues grew manifold, totalling USD 100.09 billion (around Rs 475,721 crore) in 2011-12 from a turnover of a mere Rs 10,000 crore in 1991.

Born on July 4, 1968, Mistry completed his graduation in civil engineering from London's Imperial College of Science, Technology and Medicine and followed it up with a masters in Management from the London Business School. 

With PTI Inputs