The Tata group is a global empire with a net worth of over 100 billion dollars. They are a big factor in the Indian economy. The group has grown to this size after its inception over 150 years back when the first Tata started supplying opium to China. The group progressed and the first steel plant and truck manufacturing unit was set up in India. The Tata's are now global players with hotels and plants all over the world. The present head of the group is Ratan Tata .

Four years back Ratan Tata expressed a desire to hand over the reins of this massive economic empire to a younger man. A selection committee was duly constituted and Cyrus Mistry the son of the biggest shareholder of the Tata group Shapoorji Pallonji was inducted as the Chairman of the group.

The Shapoorji group owns about 18% of the equity of Tata group and is the biggest shareholder. The Tata's themselves hold about 15 percent of the equity. Incidentally, Ratan Tata had endorsed Modi as PM 4 years back.

The corporate coup

The holding company for all Tata group companies is Tata sons and this has 9 directors who oversee the running of the group with Cyrus Mistry as the chairman. In a surprise development, more akin to a corporate coup a meeting of the directors of Tata sons was called and by avote of 6-0 with 2 abstentions, the chairman Cyrus Mistry was removed. It was a dismissal that has shaken the corporate world in India.The surprising thing is that Mistry had been handpicked by the Chairman Ratan himself.

So what went wrong in 4 years to necessitate his immediate removal? This News is reportedby the Times of India as well as CNN in their prime time news broadcast.

Clash of values

Basically, it appears to be a clash of values as Mistry who is 42 did not take into account the susceptibilities of the older Tata group members who had been with thegroup for decades.

Secondly, his stress on acquiring new businesses while trying to the sell off non-profit making entities also went against the grain of the Tata ethos of doing good without regard to profitability. The decision to sell Tata steel in the UK did not go down well with the company. In addition 7 out of the 10 biggest companies of the group listed on the NSE and BSE showed a downward trend in profits.

Last word

Ratan Tata has taken over the job himself for 4 months and a committeeconstituted to select a new head. But the reverberations of the removal of Mistry will echo long in the corporate world. Cyrus had initially thought of going to court against his summary dismissal but it appears he has dropped the idea for the time being as the board has legally voted him out.

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