Cyrus Mistry and TATA group and Sons

Big shakeup! Cyrus Mistry removed as Tata Sons chairman, Ratan Tata steps in

The board of Tata Sons shocked corporate India by sacking Cyrus Mistry as chairman four years into the job as Ratan Tata emerged from retirement to wrest back control of the group that bears his family name. The unprecedented move could spark a battle between two of Mumbai’s oldest business families, which share close ties — the Mistrys own about a fifth of Tata Sons, the group holding company. 

Tata Sons said a selection committee will choose a permanent replacement for Cyrus Mistry in the next four months. Tata, 78, who quit in 2012 after more than 20 years in charge, will serve as interim chairman of India’s biggest conglomerate during that period. Mistry, 48, remains a Tata Sons director. Tata, who has written to Prime Minister Narendra Modi informing him of the move, is likely to meet group CEOs on Tuesday. 

Neither Tata nor Mistry could be reached for comment amid speculation about non-performance and undermining of the group's value system. Tata said in a note to employees that he'd agreed to serve as interim chairman "in the interest of stability of and reassurance to the Tata Group." 

Cyrus Pallonji Mistry was removed from his position as chairman of the $100 billion conglomerate Tata group on Monday. Former spearhead Ratan J. Tata has been appointed as the interim chairman of the group and a selection committee has been formed to choose Mistry’s successor. The appointment committee has been accorded a time period of four months to complete the task as per the company’s article of association. 

Cyrus was also seen as the natural heir to the Tata group as his billionaire father owns an 18.4 percent stake in Tata group, largest stake of any shareholder in the group.

Here are the key decisions Mistry took during his time at the Tata group at the helm:

According to Mistry himself, over the last three years, the operating cash flows of Tata group grew by over 30 percent CAGR. However, he reformed business practices in the group mandating the requirement for group companies to earn the right to be part of the portfolio and also earn “the right to grow”.

During the same period, the company’s gross debt increased by 2 per cent due to increased cash and capital expenditure from projects but at the same time the cash and equivalent assets grew at around 10 per cent. The net debt of the group also decreased by 3.3 per cent during the time, so Mistry’s tenure saw reduction in debt strain on the company.

He pruned several companies from the portfolio and even changed the structure of the company’s hospitality arm from owning properties to one managing properties across the globe. A huge 70 per cent of the group’s revenue comes from abroad. A majority of the group’s capital expenditure under Mistry has been abroad.

Grasping the need to expand the company’s digital signature in the industry, apart from having the hugely successful TCS, Mistry added the digital platform–CliQ- an ecommerce platform. He also added Tata iQ which is a big data company and is rapidly growing in the field of data analytics. Finally, the group added Tata Digital Health which expanded the group’s medical business forays into e-healthcare and telemedicine taking medical care beyond physical impediments. TCS doubled its profits during the time overshadowing all competitors.

In pruning measures, Mistry was also involved in prospective selling off of long products businesses like the ailing Tata Steel in Europe due to drop in demand and massive competition from cheap Chinese supply. Also during his time, Tata teleservices failed to come out of its negative networth.

After Mistry took the position, Tata Motors focused on passenger vehicles section aiming for two launches every year. This has in turn changed customer perception about the company and lifted Tata Motors’ sales.

The group under Mistry has also tried to expand its business in the defence manufacturing business with several key contracts in the pipeline. Material sciences has been a major fillip to their defence manufacturing business during this time.