A shocking bombshell of an announcement that has rocked the top echelons of Indian corporate world, the venerable Tata Group removed Cyrus Mistry as Chairman and appointed Ratan Tata as the interim chief. Performance, or the lack of it, is ostensibly behind his departure, but that is only being hinted at at the moment and there are so many other conjectures too flying around in the corporate halls across the world. But none of them have been confirmed as yet and the conglomerate has not cleared the opaque nature of its spectacular decision to show its much-respected chairman the door. The real reason may emerge eventually or considering the secretive nature of the Tata Group working, it may never be revealed, but here we take a look the top concerns for Cyrus Mistry at Bombay House.
1. Among the biggest for concerns was the inability of the Tata group under Cyrus Mistry to find an effective solution to get rid of the steelmaker Corus stakes in plants in the UK. The problem has festered for a long time and it acquired controversial proportions when the staff in various plants had threatened to go on strike. This hit the Tata group brand hard as the corporate is known to value its standing in the public sphere at very high levels. While the performance of Corus can be blamed on the slowdown that has hit Europe and (the group was bought by Ratan Tata years ago) still it was Mistry’s responsibility to get things sorted fast.
2. Tata Motors was not being able to revive its sales even after years of Mistry at the helm. The vehicles that it was producing were being cold-shouldered by the buyers and its reputation as a reliable carmaker was being tarnished. However, just when Tata Motors got a potential hit vehicle in the form of the Hexa (it is yet to be launched), Mistry has been sacked.
3. Cyrus Mistry had the tough job of cutting the Tata group to size by getting rid of under-performing businesses or getting them back on track. But this was not happening and the only star remained the Tata Consultancy Services (TCS).
4. Another challenge was that when Mistry took over all the senior management people were either retiring or on the verge of retirement and they were taking away all their experience and sharp decision-making talent. That became irreplaceable.
5. Another problem that was hurting Tata Group was the row with DoCoMo. The Japanese company purchased Tata Tele stake for $2.7 bn. But after the deal fell through, DoCoMo wanted its money back for its entire 26.5% stake in TTSL. However, DoCoMo was unable to get back even half the investment it made in Tata DoCoMo over seven years ago. The case went to London Court of International Arbitration (LCIA) and the decision went in its favour. Since the funds did not come through it filed a case there to attach Tata assets in London including Corus and Jaguar Land Rover.