Why Ratan Tata removed Cyrus Mistry

An alternate perspective on what could have led to the removal of Cyrus Mistry

The real reason Cyrus Mistry was ousted
The real reason Cyrus Mistry was ousted

See a copy of the letter Cyrus Mistry wrote to the Directors of Tata sons, attached at the end of this post. A must read!

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]W[/dropcap]hile mainstream media is beating around the bush on the tussle between Ratan Tata and Cyrus Mistry, senior Tata executives started revealing the real reasons behind the unpleasant situation. According to the senior executives, Ratan Tata started annoying Cyrus Mistry for the past two years and the real reasons are Cyrus Mistry’s actions to undo the “bad decisions” taken by Ratan Tata in the acquisition of foreign companies, illegalities in floating and funding airline companies like Vistara and Air Asia and non-viable actions in Tata Steel and the failed Nano project.

From Day 1, Cyrus was sceptical about the Nano project and his fears came true after the Supreme Court’s verdict on Singur.

The last provocation was Mistry’s decision to sell off Tata Steel’s acquisitions in Europe. According to Tata executives, Cyrus was airing his opinion on Ratan Tata’s “follies” in non-viable acquisitions across the globe. For the past two years, Ratan Tata and his trusted man R K Krishna Kumar were monitoring the moves Cyrus made with suspicion, and the senior executives vouch the displeasure was evident in several internal mails.

Cyrus in several board meetings expressed illegalities and bad decisions taken by Ratan Tata in covertly supporting and funding Air Asia and operating Vistara. The Tata insiders say, Cyrus openly reiterated that the Public Interest Litigation (PIL) filed by senior BJP leader Subramanian Swamy would expose the wrongdoing of Ratan Tata for backing Air Asia. He cited several violations of Civil Aviation and Foreign Investment Promotion Board (FIPB) policies in the starting of Vistara and backing of Air Asia. According to insiders, Cyrus once opined that Ratan Tata’s madness to aviation is going to expose the group’s illegalities committed. He said he would use his prerogative as Tata Sons head to undo Ratan Tata’s bad decisions.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]F[/dropcap]rom Day 1, Cyrus was sceptical about the Nano project and his fears came true after the Supreme Court’s verdict on Singur. Ratan Tata would sometime lose his cool on Cyrus observations on the failed Nano project, it is alleged. Many old loyalists of Tata, led by Krishna Kumar had ignited the tussle, say senior executives.

It is widely believed that Ratan Tata and Krishna Kumar apprehended that Cyrus was going to undo several of their decisions in Tata Steel, Tata Chemicals, Tata Motors and Civil Aviation sectors.

Ratan Tata has the habit of buying hotels, wherever he spent vacations and these unstudied acquisitions across the globe based on his fancy had affected the balance sheets of Tata’s hotel business. Many hotels acquired abroad became a financial disaster, say the top executives, who wish to remain anonymous.

The decision to sell the UK’s steel operations may have been the last straw, according to the officials. It is widely believed that Ratan Tata and Krishna Kumar apprehended that Cyrus was going to undo several of their decisions in Tata Steel, Tata Chemicals, Tata Motors and Civil Aviation sectors. This led to the unceremonious exit of Cyrus Mistry, vouch senior Tata executives, citing several internal emails of bickering messages for the past two years.

The market has not liked the exit of Cyrus. Tata stocks are down and perhaps the market knew of the internal rumblings in the Tata group. The last word has not been said about this. Stay tuned.

Just as this post was going online, we came across a copy of a letter by Cyrus Mistry to the Directors of Tata Sons and the same is shown below:

Cyrus Mistry's Letter to Directors of Tata Sons Oct 25, 2016 by PGurus on Scribd

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17 COMMENTS

  1. Every Leader brings with him some fresh blood, enthusiasm, Different way of leadership style; it’s the tussle between acceptances of new Blood by old blood, the reason Cyrus Mistry Writing intervention of Ratan Tata in his operation way. It is the transition period of organization need to be understood by both successor and predecessor. In today’s fast paced global economy Cyrus Mistry want to put TATA on fast track mode of action, Quick Turnaround which is actually necessity for the organization. Always change in leadership challenges the current on-goings may be systems, procedures, technology, talent, way of working etc…(Status Quo), because that only bring change, turnaround in the organizations & will able to produce different result. It’s told that Cyrus held meeting with all group companies leaders every month with data analytics. So he may took many important decision (May be called Un-Doing of Mr Ratan Tata) for the company progress, Which Ratan tata May not able to accept, that may be the reason why Cyrus Mistry was Removed. But here I think Ratan tata should not intervene in decision of Cyrus Mistry because he had already come out from all operational activity. Any how I believe the decision to remove Cyrus Mistry is not respectable for Tata Group and even Mr. Ratan Tata.

  2. Mistry had to go as his vision for the Tata Group was quite different from what has been the Group’s path for a century. Mistry is a moneybag, the Tata Group is a banker. A banker is committed to the long term, very long term, and has no qualms about intermediate storms; a banker understands risk, that business is cyclic. A moneybag is interested in counting, tilling this month. Tata is an institution, a brand, build assidiously over a century in a land of great diversity, scarcities and opportunities. Mistry was a kid in a candy shop, and/or a bull in a china shop. Nothing fundamentally ill or bad about Mistry the man, he was not fit for the job that is all.

    The greater problem for the Tata Group is finding a successor for Mr. Ratan Tata. The pharsees have a bad habit of not marrying enough and producing enough descendants for themselves; it is a pity if the pharsee community of India become unable to sustain their community and contributions to the nation in the decades and centuries to come. For the sake of India let’s hope the Tata Trusts succeed in finding a great successor to helm the Tata Group, and that that successor is a man or woman with a sufficient quantity of progeny to keep the Group flying high.

  3. Ratan Tata not worthy of carrying on the great work n legacy of Tatas the great. Being an adopted child he is nt real blood of Tatas.

  4. no one can build a business empire on honesty.no one has ever made whether ambani, adani, birlas or any.

    shiva being sympathetic for chinese good to know. opium business was legal during british era as today liquor business is there.
    if you go to a foreign land wiith no money and i make you starve for 5 days .you will be ready to do any kinf=d of business and will want to be rich as soon as possible.

    i am supporter of swamiji,but dont agree on this .analyzing moves of cyrus,it seemed he was selling his eureka forbes water purifier instead of tata swatch.

    if you dig KM mangalam birla file on coal scam ,you will see both parities congress and bjp are saving him.

    • Listen to the song “Pusher man”.If you have a conscience, you will recognise some of the greatest follies of mankind – Opium trade was one as crude in killing the sou/lifel of chinese as slave trade was in killing the soul of blacks so was the white guys march towards the western americas killing decimating natives in millions within few years with whiteman’s diseases.These were all legal in those days and warped people like you are the reason why we as a country are in this pitiful state. Anything goes for a few bit of lucre has become fashionable among the directionless fellow Indians.We have descended to such lower depths , all for a bit of silver.

    • BS opium business was legal. It was only legal in British India and not in China where they sold and murdered millions of people. Also India itself was a slave of the British at that time, so it didn’t make any difference as to what was considered legal, whatever made the British money and India poor was obviously allowed.

  5. Apart from this tussle what comes to light is some serious hidden debt of Indian corporates/big companies and some weird/strange courage despite of these debt/loss the respective big owners seem to get (possibly due to some political backing as well..)..this seems to tally with some old article i read on a Janata website written by Dr Swamy …

  6. The way the Tata legacy is falling down is stunning. But the moot point here is that they continue to talk about ethics and values, which were thrown to winds 10′-15 years back. Many people who had great regard for Mr. Rattan had to change their opinion when 2G skeletons fell from their cupboard. That he doesn’t seem to regret these is even more surprising. While many of Rattan’,s fans would have expected him to go in to the corporate history as the torch bearer of a great legacy, they may have to accept the bitter truth that this is not going to be the case.

  7. A business built on opium trade in 1800s due to which millions of Chinese died in very short span of time cannot turn to one of milk and honey.Dig a little, bucketful of dirt comes out…What will come out of this sordid decision?

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