It was not very long back – for a corporate life cycle – that Cyrus Mistry made it as top boss of the Tata Group. Many lauded the process and the appointment. But, this sudden development, without transparency on why this decision was taken, does not gel with the ‘ethical’ ethos and image of the Tata Group. Shareholders of various Tata companies, millions of customers & Indians who have gone by the Tata name should definitely know more. In these initial moments of the news coming out, not much is known why this decision was taken.
What this also shows is that it is about time the Tata Group thought radically differently. While its structure and methods have served it well over the last few decades, the last few years have seen competition take on the might of a group as powerful of the Tata Group.
Many of its main businesses are under stress – some due to decisions that were taken during Ratan Tata’s tenure.
Cyrus Mistry had started the process of taking radical decisions like jettisoning the expensive Corus purchase and other non-core businesses. TCS is the only one perhaps that stands out, but global stress is impacting it too.
In the meanwhile, competitors are out-flanking the mighty Tata Group across sectors. Reliance has built a huge telecom business right from scratch, twice over.
Competitors have come in the automobile and even the Tata bread-and-butter commercial vehicle business. Tata group is facing litigation and the risk of paying out a massive $1.2 billion to its estranged partner which has gone to international judicial forums.
Tata Sons doesn’t just need another chairman, it perhaps needs a radical overhaul of its processes of managing group companies. It is not clear how & how much Tata Sons controls the fate of these group companies.
But, what is clear is that this structure is not working out for the Tata group. It needs to fix the fundamentals, not just replace people.