Loose Screws In The Tata Wheels

Behind Cyrus Mistry’s booting out was his doggedly independent action, and Ratan tata’s intolerance of it.

- Arindam Mukherjee

It is a corporate implosion that is being watched with keenness by markets and authorities in India and overseas, for it involves one of India’s biggest business houses. Central to the tussle are issues related to the Tata Group’s corporate integrity, its strategies, governance practices and how professionals are treated.

Various business, political and analyst circles are abuzz with questions about whether the Tata Sons board’s action in unceremoniously removing its chairman Cyrus Mystry followed the best business practices. If anything, it has created a clear divide in the corporate sector. One section feels the Tata Group was right in removing a chairman who was not working in its best interests. The other, much bigger, group feels that Mistry has been wronged, as he was doing all it needed for the group’s profitability and growth.

Says former IIM-A professor and business historian Dwijendra Tripathi, “Obviously, best corporate practices were not followed. Cyrus Mistry should have been given a chance to explain. He should have been told about the basis for the proposal to remove him before the meeting was convened. The group’s corporate governance policies would be questioned because of this. The way it has been done will affect the image of the Tata house. Never in its history has the dirty linen been washed in public in this fashion.”

Even though an expert panel is on the job to look for Mistry’s successor, in many ways, things are moving slowly at the Tata Group, as both sides are firing salvos at each other in a blame game and are on the brink of a legal battle. The swords are drawn at Bombay House.