A year of Tatas without Cyrus Mistry

It was a Monday before Diwali and a fortnight before the announcement of demonetisation. The festive mood had set in and the news flow was thinning, when Ratan Tata decided to give a stimulus package to the pink press and its bored reporters. The press release of his sacking Cyrus Mistry as chairman of Tata Sons, the mothership of the country’s premier business group, which soon began flashing across TV screens was the beginning of at least three months’ saturation coverage of various companies, people, and sections of corporate law, which even a major national event like demonetisation could not put in the shade.

Though the Mistry camp bloggers have now made a hue and cry about six public relations firms engaged by the Tatas, the younger son of the Phantom of Bombay House did not shy away from the limelight himself. He had his own PR consultants helmed by one of his close confidants, who had international public relations experience and had once handled a high-profile corporate battle in another sector. 

From the investors’ perspective, the public spat helped them understand the group and its constituents and their inter-linkages better. Before the spat, even some Tata group reporters were not very familiar with the holding and governance structures and the relative significance of each of the group entities. 

An unknown cousin came into the limelight. An oft- referred to half-brother was once again inducted into the succession race. Somebody tracked down the reclusive brother of Ratan Tata, who was indifferent to all the hype and hoopla. When the Times of India reporter asked Jimmy Tata whether he would, like the group's founders, leave his estate to a trust after his death, pat came the reply, “Let them fight it out just as they are fighting now.”

And, then there was Nusli Wadia. The chairman of Bombay Dyeing was among the few overt supporters of Mistry. Wadia, who was a long-serving independent director on the boards of key Tata companies such as Tata Motors, Tata Steel, and Tata Power, even wrote to the Securities and Exchange Board of India (Sebi) about the alleged corporate governance lapses in the process of sacking Mistry first from Tata Sons and then subsequently from companies such as Tata Consultancy Services.

After fighting it out in the press for a couple of months, Mistry found the writing on the wall as the government-controlled institutions did not seem to be interested in taking on the trusts led by Ratan Tata.

A legal battle has been continuing for the past several months in the National Company Law Tribunal and its appellate body. Meanwhile, a new chairman of Sebi came in February and no specific measures have been taken on the complaints against the group. However, a committee comprising eminent people led by senior banker Uday Kotak has examined the corporate governance framework and has suggested changes including splitting of posts of chairman and managing director.

An analysis of share prices of the group companies showed that five of the eight major listed entities of the group are trading at levels higher than on October 24, 2016. Tata Steel was the top gainer, rallying 64 per cent, followed by Tata Global (32 per cent), Tata Chemicals (26 per cent), Tata Communications (7.3 per cent), and the group cash cow Tata Consultancy Services (6.3 per cent).

Tata Motors closed at Rs 559 on the day Mistry was sacked. On Monday it was trading at Rs 423 levels, a fall of 24 per cent. Indian Hotels fell from Rs 121 to Rs 112.65 and Tata Power from Rs 83 to Rs 81.55.

While Tata has passed on the baton of Tata Sons’ box seat as promised to the much younger and able successor in N Chandrasekaran, he is yet to say goodbye to the Tata Trusts, which drive the driver. In December, he will turn 80.