In a sudden move, the board of Tata Sons on Monday “replaced” Cyrus Pallonji Mistry as chairman. Mistry has taken charge of the $103-billion salt-to-software conglomerate almost four years ago. Tata Sons, the group’s holding company, did not mention any reasons for the replacement. His predecessor Ratan Tata will be interim chairman till the new one is appointed.
The fact that several group companies are struggling is said to be the cause of Mistry’s exit.
It may be recalled that it was Tata who had chosen Mistry as chairman of Tata Sons in November 2011. Even though Tata had retired from the Tata group at the age of 75, and was busy being angel to technology start-ups, he did not take his eye off the group he had led for two decades. Evidently, the happenings in the top corporate house did not please him and other shareholders of the conglomerate.
“Tata Sons today announced its board has replaced Mr Cyrus P. Mistry as Chairman of Tata Sons. The decision was taken at a board meeting held here today,” a Tata Sons statement said.
The Indian Express quoted former attorney general Mohan Parasaran saying that the group had sought legal opinion a month ago on “issues relating to management.” Parasaran said, “He was replaced due to management issues.”
The Tata Sons board set up a selection committee to choose a new chairman for Tata Sons which holds a considerable stake in Tata companies. The committee comprises Ratan Tata, industrialist Venu Srinivasan, investment banker Amit Chandra, former diplomat Ronen Sen, and economist Lord Kumar Bhattacharyya. “The committee has been mandated to complete the selection process in four months,” the Tata Sons board said.
Naval Tata, Ratan Tata’s half brother, was a contender.
Ratan Tata chairs Tata Trusts, which holds a major stake in Tata Sons. About two-thirids of the equity of Tata Sons is held by philanthropic trusts endowed by members of the Tata family.
Mistry’s family, headed by Cyrus’s father construction tycoon Pallonji Mistry, holds 18 per cent equity in Tata Sons.