Business Today

Surgical Strike at Tata Sons: Ratan Tata's deep distrust behind Cyrus Mistry's removal?

Even by the 'surgical' standards of the corporate world, it's unprecedented to remove a group chairman without a whiff, let alone by the molly-coddling ways of the $102 billion Tata group which prides itself in being humane in its treatment to the lowest of its employees.

twitter-logo Rajeev Dubey        Last Updated: October 25, 2016  | 12:44 IST
Surgical Strike at Tata Sons

Even by the 'surgical' standards of the corporate world, it's unprecedented to remove a group chairman without a whiff, let alone by the molly-coddling ways of the $102 billion Tata group which prides itself in being humane in its treatment to the lowest of its employees.

The swiftness with which Cyrus Mistry was 'replaced' with Ratan Tata as interim chairman for 4 months is drowning the corporate world in needless rumours.

But the fact that Mistry either didn't get an opportunity to resign or refused to resign speaks of a deep mistrust between the executive chairman Mistry and the man representing its largest shareholder, Tata Trusts-Ratan Tata himself. Tata Trusts, including the biggest-- Sir Dorabji Tata Trust and Sir Ratan Tata Trust-own 66 per cent of Tata Sons. What were the circumstances that Cyrus wasn't given an opportunity to make a graceful exit?

A decision of this nature is also unprecedented because the group has a stated 'humane' policy of removing employees only on ethical grounds or under grave circumstances. In recent times, a managing director of one of the group companies was given more than a year to find his way out of the group after it was decided to ask him to leave.

ALSO READ:Coup at Bombay House: Cyrus Mistry removed as Tata Sons chairman, Ratan Tata takes seat

Group companies and their employees are governed by the 'The Tata Code of Conduct' which is a set of principles that guide and govern the conduct of Tata companies and their employees in matters relating to business. "The Code is a dynamic document that reinforces the Tata canon of honourable behaviour in business," says Cyrus Mistry signing off the Tata Steel Cod of Conduct in 2013 after fresh modifications were introduced. "These modifications have reinforced the Code, and enable it to reflect the diverse business, cultural and other factors that have a bearing on the health of the Tata brand."

The code says: "Every employee shall be responsible for the implementation of and compliance with the Code in his / her environment. Failure to adhere to the Code could attract severe consequences, including termination of employment".

Speculation is rife. Does it have to do with control of Tata Sons? Remember, Mistry family owns 18.4 per cent equity in Tata group holding company Tata Sons. Mistry family buying the stake from minority shareholders in the 1930s didn't go down well with the Tata family which considered it having being done behind their back.

Or, else, what were those grave circumstances under which it was considered necessary to humiliate the group chairman by replacing him? After all, it's one thing to ask the group chairman to resign, give him enough time to make his way out and pretend it was an honourable exit. At least, that's how most of corporate world, including in India and the world, operates. It's another to replace him in a swift action, dealing a blow to his reputation and respect across the group.

Tata group would have been better off without those. Instead of a two-paragraph statement that leaves more people guessing than informed, a detailed statement would have rendered this futile.

 

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close