The news of sacking of P. Cyrus Mistry has left wondering about why and under the what circumstances he was sacked. Though there has been no formal reason given by TATA group for his sacking, we will try to analyze few points which led to the ouster of P. Cyrus Mistry.
Before looking out for any reasons, let’s firstly understand about TATA and its different type of businesses. TATA group of companies is the parent umbrella which constitutes various units of TATA group. A TATA Sons is one such company and is the holding company of TATA Group. The Chairman of TATA Sons is the chairman of operating companies of TATA Group. This company is the major decision maker among Tata group and decides which sector has to be given how much capital.
Ratan Tata is a traditional businessman of TATA family who believed in acquisitions and carrying out his lavish dreams. While Mistry, on the other hand, believed on focussing more on the business which was yielding more profits rather than having a holistic approach towards all of their business. Take for instance the majority of revenue ( around 70% ) of TATA group was f from its two units only namely TCS group and Land Rover.
And this was the major reason for the sacking of Mistry that – the revenues of the Tata Sons has considerably come down since Mistry’s taking over as chairman. The trust was also worried about the fact that – performance of Tata Sons was largely dependent only on two companies – Land over ( JLR ) & TCS.
Mistry is the owner of SPCL ( Shapoorji Pallonji Construction Limited ). He was thus accused of not working as per the culture of TATA and tried to influence many decisions to bring those fundamental changes in the work culture of TATA group. It is believed that Ratan Tata, in particular, was not happy with the working methodology of Mistry and after the feud of TATA Docomo in which the company lost the large sum of money at legislation in the UK, he decided to take over all operations in TATA group. Mistry believed on diversification of business while Ratan Tata on acquiring of business as a model for their growth.
In Mistry’s tenure the TATA group – sold its steel business across the UK. Also, notable dis-investment include a sale of TATA Chemicals urea plant in Uttar Pradesh (state of India), in July Taj Boston hotel, one of its 3 US based properties too was sold over.
Ratan Tata’s tenure, on the contrary, marked some of the biggest acquisitions in the history of the company. He acquired the European steel company “ Corus “ in UK & Jaguar Land Rover in 2008. In all a total of around 40 companies ranging from steel, telecom, it, etc. was acquired by the corporation in his tenure.
Thus one can clearly see the stark difference in the working style of the two. Ratan Tata and others were truly not happy with the kind of work culture change which Mistry wanted to bring on. The main reasons for his downfall can thus be summarized as the decrease in revenue of Tata group, conflict of interest and poor performance.