Tata Sons, the holding company of Tata Group, unexpectedly replaced Mr. Cyrus Mistry with his predecessor Ratan Tata on Monday, giving no explanation or details about its decision.
It took less than half an hour at a full-strength board meeting on Monday afternoon in Mumbai to replace Cyrus Mistry as the chairman of the Tata Group, it is learnt. The meeting was attended by all 11 board members, including Nitin Nohria, the dean of Harvard Business School, and top-ranked investment strategist Farida Khambata, both of whom are based in the US and who usually attend meetings through video-conferencing. This was no ordinary meeting, where even Ratan Tata was present as chairman emeritus, as a source pointed out. The 78-year-old Tata left the meeting as interim chairman of Tata Sons.
Several resolutions were put to vote, but there were three that would eventually decide the future of the salt-to-software conglomerate. The board members voted in favour of those resolutions — replacing Mistry as chairman, inducting Tata as interim chairman, and relaxiTata Sons unexpectedly booted Cyrus Mistry from Chairmanshipng the age criterion for the chairman’s post. But sources told that two board members abstained when the resolution on Mistry was put to vote and one abstained in the case of the other two.
While nobody could tell when a decision was taken to replace Mistry, putting himself in the chairman’s role all over again may not have been Tata’s first choice, sources said. Other names were considered, according to one of the sources. But the decision boiled down to Tata himself, till the next chairman is chosen by a selection panel. Although the company has said it would take four months to complete the process, some believe it may take longer, at least seven to eight months.
But analysts say there was a clash over strategy, with the Tata family unhappy at Mr Mistry’s policy of looking to sell off parts of the business – including Tata’s European steel business – rather than holding on to assets and extending the firm’s global reach. But it’s not just Mistry, who’s been replaced as chairman. The group executive council of Tata Sons has been disbanded with immediate effect as well. The council, headed by Mistry, was seen as a power centre of the group. The council members included Nirmalya Kumar, a visiting professor at London Business School; Madhu Kannan, former CEO of Bombay Stock Exchange; and N S Rajan, former partner at EY. Kumar has been responsible for strategy at the group level, Kannan was head of business development and Rajan the chief human resources officer.
Roles of those members of the group executive council who are part of the Tata group, such as Mukund Rajan, who’s also the brand custodian and group spokesperson, and Harish Bhat, who’s held top positions across group companies, will be redefined.