Possible Reasons behind Sacking of Cyrus Mistry as Chairman of Tata Group


BENGALURU: On 24th October 2016, news came that Cyrus Mistry is sacked from the post of chairman of the Tata Group and Mr. Ratan Tata is named as the interim chairman for the period of four month till the board decides on his successor. All of this was decided in the board meeting of Tata Sons. Cyrus has now become the person holding the throne of Tata Sons for the shortest period of time. The real reason behind the sacking of Mistry is yet to be learned, but The Economic Times reported some possible reasons that may have forced the Tata Group to take such a bold decision.

In the month of June, Cyrus Mistry cleared a deal to acquire Welspun’s solar farms in $1.4Bn for Tata Power, without taking approval from any stakeholders in the group. The earlier tiff between Mistry and Tata became evident when Mistry sacked Raymond Bickson, MD, Indian Hotels in 2014 and replaced him with Rakesh Sarna a veteran from Hyatt. Bickson was very close to Ratan Tata. The matter became more worse when Mistry stood by Sarna by ignoring all the complaints against him.

Many members of the Tata sons were unhappy with the creation of Group Executive Council (GEC) by Cyrus Mistry. The members were upset because of the lack of business operational experience of GEC members. Mistry was totally different from Ratan Tata in terms of vision, ethos, and values to direct the group. Tata Group members sent various letters to Mistry asking for his future vision, but his replies were unclear and unspecific.

Cyrus Mistry is not a member of Tata family, but he is the son of Pallonji Mistry, the largest shareholder in the Tata Group. Therefore, some confrontations were present between Mistry and other members. Tata group was unhappy with some decisions of Mistry like shutting down UK steel operations, disposal of overseas properties of Indian Hotels Corporations. The situation has become worse when Tata lost a legal battle with NTT Docomo in international arbitration court and it was seen as the breach of faith for Tata shareholders.

The members of Tata Sons wanted him to give up his Irish citizenship as a chairman of Tata Sons, which he denied. There are various other conflicts of interests about giving contracts to the construction companies under the Shapoorji Pallonji Group. These are some of the possible reasons which did upset Tata Trusts and led the Board to take the power away from Mistry.

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