Why has the Tata sons board voted to remove Cyrus Mistry as chairperson?
This is a bold move by any standards. Removing Chairman of a $100bn family run business is a tough call taken by the board. They wanted to show that they mean business.
Cyrus Mistry was going against the Tata ethics.
Group "should not be afraid of taking tough decisions for the right reasons, with compassion" amid "challenging situations"
That’s what Cyrus Mistry said about selling of Tata Steel UK among other non-profiting businesses.
Though this looks lucrative, its not the DNA of Tata group which is present in probably every business from Salt, Steel to Software.
The board was unhappy with such bold decisions which would result in short term gains but long term loss of reputation.
Also, company’s performance has dropped since Cyrus took over.
The turnover of India’s largest conglomerate dropped to $103 billion in 2015-2016 from $108 billion the previous year. Net debt rose to $24.5 billion in March 2016 from $23.4 billion a year ago.
And mind you, this has happened during time when world and Indian economy are booming.
Ratan Tata will be the interim chairman for 4 months until the committee selects the successor - who might be an outsider as well.
Desperate times, desperate measures.
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