Cyrus Mistry's surprise removal as Chairman of the Tata Group was rooted in a mismatch of values between him and Ratan Tata, his 78-year-old predecessor, according to Harish Salve, a long-time legal adviser to the $100 billion group.
- After 4 years, Cyrus Mistry removed as Chairman of Tata Group
- Ratan Tata returns as interim chief for 4 months
- Tata's assets were being sold in conflict with values: Harish Salve
Mr Tata, 78, has returned as the conglomerate's top boss for four months during which a selection committee has been tasked with finding a replacement.
"I'm sure all the people concerned here know they are not fighting for a piece of land or property," said Mr Salve to NDTV, emphasizing that the group felt its formidable international reputation was being compromised.
Mr Salve confirmed what NDTV reported in an exclusive story this morning -that the patriarch of the founding family of India's largest conglomerate believed that Mr Mistry, 48, was getting rid of "the family jewels" by moving to get rid of Tata's entire steel operation in the UK, and selling hotels in America that are part of the group's ritzy Taj chain.
"Tata has a reputation for weathering storms," Mr Salve told NDTV about the move to sell UK steel, which has been stalled by Brexit. He suggested that Tata's traditional approach, core to its values is "you don't ditch assets in difficult moments ...try to fix it before you dismantle it."
Tata Steel, Britain's biggest steelmaker, put its UK assets up for sale in March after taking a hit from escalating costs, Chinese imports and weak demand. But, Mr Salve said, the Tata board felt that when the group acquired its steel operation in the UK, "it was not just buying a business, it was buying into an institution" and the decision to put Tata Steel on the block rankled because it was seen as a trend of selling assets and reversing acquisitions made by Mr Tata, which included luxury auto maker Jaguar Land Rover and European steel manufacturer Corus.
Mr Mistry, whose Shapoorji Pallonji family is one of the biggest shareholders in Tata Sons, moved to sell parts of the business as debts accumulated to $30 billion.
Mr Salve also confirmed that the DoCoMo case, which involves Tata being ordered to pay 1.4 billion dollars to its former telecom partner, was another major stress point, with sources close to Mr Tata believing that he was to be made "the fall guy" for the deal by his successor.
During his four-year term as Chairman, Mr Mistry stayed away from the limelight, limiting his speeches to company events. In a rare interview last month, in Tata's in-house magazine, he admitted the challenges facing some of the Tata group companies would "entail hard decisions on pruning the portfolio."
Mr Salve stressed that the decision to remove Mr Mistry could not have been taken overnight, but conceded that the ouster is tainted by bad blood. "When it comes to governance of an institution, sometimes things don't go right, there is hurt, there is disappointment, sometimes there is also a sense of humiliation," he said.