Tata group stocks were trading in red in morning deals on Tuesday after Tata Sons on Monday sacked Cyrus Mistry as chairman and was replaced by Ratan Tata. The surprise announcement came after the Board of Tata Sons met in Mumbai and decided to replace Mistry and appoint Ratan Tata as interim head. At 9.56 am, shares of Tata Motors, Tata Steel and TCS were trading down by 0.60 per cent, 2.35 per cent and 1.19 per cent, respectively.
Ratan Tata would be the interim Chairman for the next four months till a successor is appointed by a five member selection panel.
Other Tata group majors such as Tata Global Beverages, Rallis India, Tata Elxsi and Tata Chemicals were down by 2.83 per cent, 0.53 per cent, 1.43 per cent and 3.45 per cent, respectively.
“Tata Sons announced its board has replaced Cyrus P Mistry as chairman of Tata Sons. The decision was taken at a board meeting held here today,” a Tata Sons statement said.
The board constituted a selection committee comprising Tata, TVS Group head Venu Srinivasan, Amit Chandra of Bain Capital, former diplomat Ronen Sen and Lord Kumar Bhattacharya. All of them, except Bhattacharya, are on the board of Tata Sons.
“The committee has been mandated to complete the selection process in four months,” it added.
According to Angel Broking, the reinstatement of Ratan Tata is expected to add stability during this transition phase.
The combined market valuation of all listed companies of Tata Group almost doubled during the four-year tenure of outgoing chief Cyrus Mistry. The Shapoorji Pallonji Group has termed the removal of Cyrus Mistry from the chairman post of Tata Sons as “illegal” and would likely to challenge the decision.
“We do not expect this development to have a long term impact on any of the Tata group stocks,” said Angel Broking in a research note.