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    Tata steers ahead, Cyrus Mistry keeps cards close to chest

    Synopsis

    Cyrus Mistry’s unexpected firing and the ouster of his core team of advisors have left the group’s top management rattled, sources said.

    ET Bureau
    MUMBAI: Ratan Tata circled the wagons on Tuesday, strengthening his control over the Tata group by appointing two new directors at holding company Tata Sons and making sure it was protected from possible legal challenges by Cyrus Mistry following his dramatic dismissal as chairman. By evening, Mistry sent an email to Tata Sons directors and trust members criticising the board decision but gave no inkling about his possible course of action.

    The new Tata Sons directors are Tata Consultancy Services CEO N Chandrasekaran and Jaguar Land Rover CEO Ralf Speth. Mistry was sacked by Tata Sons as chairman on Monday.

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    As the first order of business, Ratan Tata addressed Tata group company bosses at the Bombay House headquarters on Tuesday morning, telling them that the focus would be on longterm goals, said people with knowledge of the matter. He said ongoing initiatives by various group companies were under evaluation, signalling a definitive power shift.
    Image article boday



    “We will evaluate and continue to undertake those that are required to. If there is any change, they will be discussed with you,” said Tata, who has taken over as interim chairman until Mistry’s replacement is picked in the next four months. “I look forward to working with you as we have worked together in the past.

    Also Read: Manner of Mistry's ouster may have scared off the best candidates

    An institution must exceed the people who lead it. I am proud of all of you and let us continue to build the group together.” He also asked them to focus on growth, profitability and improving shareholder value.

    Sources said the next step for the Tata group may be to create a management team similar to the Group Executive Council (GEC) that Mistry had put in place when he took over. Tata may establish a team of senior CEOs including TCS boss Chandrasekaran to mentor the heads of smaller group companies in the new regime, sources said.

    Also Read: 'Shocked' Mistry says removal unparalleled, terms board proceedings as invalid, illegal

    There was no response to queries sent to Tata Sons on these matters. “I am humbled by this honour and I look forward to contributing to the board,” Chandrasekaran said on his new role as board member. “Both a management team and mentoring team are distinct possibilities as (Ratan) Tata is 78 years old,” said the head of a search firm. “He will need to have clusters under trusted guides so that they can have better focus — N Chandrasekaran of TCS and Bhaskar Bhat, MD of Titan, could be some of them.”

    Meanwhile, Tata Global Beverages is scheduled to hold its board meeting on Wednesday, the first by a group company after Mistry's replacement.
    Image article boday

    PREEMPTORY CAVEATS
    Tata Sons filed several caveats in various courts on Tuesday to preempt any move by Mistry to get a favourable court order without the Tata version being heard, said Abhishek Singhvi, part of the Tata team of lawyers. “Statesmanship on all sides may still solve and diffuse the issues, but the courts are always there to resolve the un-resolvable,” he said. “Filing of caveats is a normal practice by way of advance warning and should not be read as any aggressive initiative.”

    Apart from Mistry’s email response on Tuesday evening, both sides till now have only released short and carefully worded messages that revealed little about what led to the development. While Tata executives and other insiders have been giving off-the-record briefings, a statement on behalf of Mistry and his family’s Shapoorji Pallonji group, which owns a fifth of Tata Sons, made clear that no legal challenge was being considered for now. “Events of the past 24 hours obviously involve an element of sensitivity if not surprise. They need time for being assessed. As and when a public statement becomes necessary, it would be made,” the statement read. “Neither the SP Group nor Mr Cyrus Mistry has made any statement yet. While the circumstances are being studied, there is no basis to media speculation about litigation at this stage.”

    MANAGEMENT RATTLED
    Mistry’s unexpected firing and the ouster of his core team of advisors have left the group’s top management rattled, sources said. The plan of action on various debt-cutting initiatives, acquisitions and sale of non-core assets is awaited, they said, indicating that a thorough systemic overhaul was on the cards. The group has 29 publicly listed enterprises with a combined market capitalisation of about $116 billion as of March 31. In FY16, the gross revenue of Tata companies was $103 billion.

    Mistry had undertaken several changes at the group since taking over in 2012 from Ratan Tata that were aimed at making the 150-year-old conglomerate more consumer facing and to help reduce its massive debt that stemmed from an acquisition spree of past years. The status of some the senior-level officials appointed by Mistry also remained unclear.

    The GEC, which was disbanded on Monday afternoon, comprised Mistry, human resources chief NS Rajan, strategist Nirmalya Kumar, business development officer Madhu Kannan, Tata veteran Harish Bhat and brand custodian Mukund Rajan. While Mukund Rajan and Bhat will be given alternative roles, the future of NS Rajan, Kannan and Kumar is not clear.


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