A day after Tata Group abruptly ousted Cyrus Mistry as chairman, interim head Ratan Tata on Tuesday asked CEOs of group firms to focus on their business and enhancing returns to shareholders without being distracted by change in top leadership.
After attending Monday’s eventful board meeting of Tata Sons — the holding company of Tata group — where Mistry was voted out, the Tata family patriarch met chief executives of group companies to talk about ongoing initiatives.
“We will evaluate and continue to undertake those (steps) that are required to. If there is any change, they will be discussed with you,” Tata, 78, told the top executives of the $100 billion conglomerate.
Sources said he did not discuss the reasons that led to the sudden removal of Mistry. Tata, who was at the helm of the group for 21 years before passing on the baton to Mistry in December 2012, said he has assumed the role of the Interim Chairman for stability and continuity so that there is no vacuum.
“This will be for a short time. A new permanent leadership will be in place,” he added.
He asked them to focus on their respective businesses, without being concerned about change in leadership.
“The companies must focus on their market position vis- -vis competition, and not compare themselves to their own past. The drive must be on leadership rather than to follow,” Tata told the leaders. “An institution must exceed the people who lead it.”
In a sudden and dramatic turn of events, the board of Tata Sons yesterday sacked Cyrus Mistry as Chairman of India’s largest conglomerate Tata Group and replaced him by Tata.
Tata Sons board has nine members including Tata. Six of them are said to have voted for removing Mistry while two abstained. Mistry, but naturally, opposed the decision.
Mistry, 48, who was appointed as chairman in December 2012, was only the sixth group Chairman in nearly 15 decades and the first from outside the Tata family. He will remain a director of the individual companies, though his tenure as Chairman is the shortest so far at the group.
Under Ratan Tata’s chairmanship spanning over two decades (1991 to 2012), the Group’s revenue grew from around $6 billion to $100 billion, driven by his expansionist strategy that included overseas purchases like tea maker Tetley in 2000 and luxury car company Jaguar Land Rover (JLR) in 2008.
Mistry, on the other hand, was looking at tackling mounting debt by raising cash, refinancing loans and selling assets after writing them down. Soon after sacking Mistry, the group removed link to his first and last interview to the Tata website where he had his 2025 vision to make the firm among the 25 most admired corporates and employers globally.
Tata Sons has already announced that a Selection Committee has been constituted to choose a new Chairman, and will complete its mandate in four months.
The panel comprises of Tata, TVS Group head Venu Srinivasan, Amit Chandra of Bain Capital, former diplomat Ronen Sen and Lord Kumar Bhattacharya. All of them, except Bhattacharya, are on the board of Tata Sons.
Tata stocks fall up to 3% on Cyrus Mistry ouster
Tata Group stocks on Tuesday ended up to 3 per cent lower after Cyrus Mistry was removed as chairman of India’s largest conglomerate and replaced by his predecessor Ratan Tata in the interim, with key firms losing nearly Rs 10,700 crore collectively in market capitalisation. Shares of Tata Steel fell by 2.51 per cent, Tata Power lost 1.5 per cent, Tata Consultancy Services slipped 1.20 per cent and Tata Motors went down by 1.07 per cent on BSE.
The market valuation of TCS declined by Rs 5,753.3 crore to Rs 4,72,636.70 crore, while Tata Motors lost Rs 2,432.01 crore to Rs 1,58,990.99 crore. The valuation of Tata Steel dropped by Rs 1,039 crore to Rs 40,354 crore and Tata Power saw an erosion of Rs 337.38 crore to Rs 22,272.62 crore. Shares of Tata Sponge Iron dropped by 3.04 per cent, Tata Coffee declined by 2.63 per cent, Tata Global Beverages (2.47 per cent) and Tata Communications (2.26 per cent). Tata Chemicals fell by 2.09 per cent and Tata Elxsi shed 1.40 per cent.
Together all these firms lost Rs 10,688.51 crore in market capitalisation. During the morning trading session these stocks had lost up to 4.2 per cent. “What would provide reassurance to the market is the fact that Ratan Tata is back in saddle as the interim Chairman as also the tight deadline of four months given to the selection committee by the Board of Tata Sons. After the initial wobble the group’s shares should stabilize in my view,” said Ajay Bodke, CEO & Chief Portfolio Manager PMS, Prabhudas Lilladher.