New Delhi, Oct 25: In a surprising move, Tata Sons board removed Cyrus P Mistry from the post of Chairman of the company. Ratan Tata will replace Cyrus Mistry as the interim Chairman of the Tata Sons. A selection panel has been formed to find a replacement for Cyrus Mistry in four months. However the announcement took the corporates and others by surprise, but insiders claimed that the removal of Cyrus Mistry was expected considering the growing rift between him and Tata Trusts. The Tata Trusts that controls about 66% of Tata Sons, the group holding company that was created by the families of the sons of founder Jamsetji Tata, had been giving indication of ouster of cyrus Mistry.
In an expansion move, Tata Sons board inducted Piramal Enterprises Chairman Ajay Piramal and TVS Motor Chairman Venu Srinivasan. The two key appointments were made on August 26 without consulting then Chairman Cyrus Mistry. The two appointments were made to tighten the grip of Tata Trusts over the Tata Sons board headed by Cyrus Mistry, reported The Economic Times. The Tata Trusts decision came after Cyrus Mistry took a key decision without taking Ratan Tata or other shareholders in confidence.
According to the report, Cyrus Mistry in June had cleared Tata Power’s $1.4-billion acquisition of Welspun’s solar farms without seeking approval from either Ratan Tata or other key shareholders. Besides that, company insiders also revealed that there had been several points of differences between Ratan Tata and Cyrus Mistry. Cyrus Mistry was not specific about the future plans of the Tata Sons. When Cyrus Mistry was asked to elaborate his vision and five-year plan for the company, he was unclear in his response. (ALSO READ: Cyrus Mistry fired! Here’s all you need to know about who he is and why TATA said tata to its Group Chairman)
Many also believe that the confrontation between Ratan Tata and Cyrus Mistry was inevitable. However Cyrus Mistry represented the single largest shareholder in Tata Sons, he was an outsider. On the other hand, Ratan Tata is a custodian of a century old legacy. Cyrus Mistry as the Chairman of Tata Sons shut many pet projects of Ratan Tata which were generating great revenue for the company. Cyrus Misty’s move to shut the UK steel operations, also did not go down well with Tata Trusts.
Keeping aside the concerns of Ratan Tata and many Tata old-timers, Cyrus Mistry went ahead with a legal battle with NTT Docomo and challenge the $1.2-billion international arbitration court’s order that went against Tata. The face-off between Ratan Tata and Cyrus Mistry had come out in open in 2014 when the then Tata Sons Chairman sacked Indian Hotels managing director Raymond Bickson, who was close to Ratan Tata. Cyrus Mistry appointed Hyatt veteran Rakesh Sarna as the new managing director. Matters worsened when Mistry continued with Sarna despite alleged complaints against him.
Over the years, Cyrus Mistry lost the trust of Ratan Tata and several shareholders and took decision that didn’t go well even from the perspective of the Tata group. The confrontation with Ratan Tata, flawed appointments and growing mistrust among shareholders led to the removal of Cyrus Mistry from Tata Sons.