The crisis in the Tata group is not just a boardroom battle between Ratan Tata and Cyrus Mistry. It is a conflict between two ideas of doing business, between the old “Tata way” of taking a long-term perspective on investment and a new brash way of seeking quick returns.
The 148-year-old house of Tatas, the pioneering industrial conglomerate that is widely admired for its brand of classy capitalism and the panache with which it conducts its business, is in the throes of its deepest-ever leadership crisis. The swift, sudden and unceremonious eviction of Cyrus Pallonji Mistry as chairman of Tata Sons, the holding company that controls a hundred business entities belonging to the group, on October 24 shocked not just the world of business but the wider public too. In a terse statement, the group announced that Mistry, who was at the helm for less than four years, would be replaced by Ratan Tata, his predecessor, as the interim chairman, with a tenure of four months during which a successor to Mistry would be found.
The eviction of Mistry threatens to engulf the House of Tatas in an unseemly battle which threatens to draw its attention away from the business end of its interests. Mistry, who succeeded Ratan Tata at the helm, first as an understudy to him in 2011 before assuming full-scale responsibilities as chairman in December 2012, also controls the largest single block of shares in Tata Sons.
This is by virtue of him being the representative of the Shapoorji Pallonji group, an industrial conglomerate whose interests are primarily focussed on the construction business. Incidentally, the group traces its origin back to the time the Tatas established their empire in 1868. But, more germane to the current fracas is the fact that this large block of shares, constituting 18.4 per cent of Tata Sons, can create a few headaches for Ratan Tata.
This story is from the November 25, 2016 edition of FRONTLINE.
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This story is from the November 25, 2016 edition of FRONTLINE.
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