A day after ousting Cyrus Mistry as Tata Sons Chairman, Ratan Tata, the newly appointed interim chairman, told the senior management of the conglomerate’s firms to focus on their businesses without being concerned about the top level change. The process to find a permanent Chairman to succeed him would soon begin, Tata said.
Tata also told group companies to act as leaders in their respective markets and enhance returns to shareholders. “The companies must focus on their market position vis-à-vis competition, and not compare themselves to their own past. The drive must be on leadership rather than to follow,” he said, addressing managing directors, CEOs and senior leaders of Tata companies. The Tatas have not made any changes in the top rung of the group after Mistry’s ouster.
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However, Tata Sons has dismantled the 6-member Group Executive Council (GEC) which was formed by Cyrus Mistry in 2013. GEC members included HR chief NS Rajan, Nirmalya Kumar, business development officer Madhu Kannan, brand custodian Mukund Rajan (who is the brother of former RBI Governor Raghuram Rajan) and former Titan COO, Harish Bhat.
“I look forward to working with you as we have worked together in the past. An institution must exceed the people who lead it. I am proud of all of you, and let us continue to build the group together,” Tata said at the meeting held in Bombay House. The meeting with CEOs is seen as an indication that Tata would continue with the current leadership teams in group companies.
He told the leadership of the companies to focus on their respective businesses, without being concerned about a change in leadership. Referring to ongoing initiatives in the companies, he said, “We will evaluate and continue to undertake those that are required to. If there is any change, they will be discussed with you.” Tata reiterated that he had assumed the role of the Interim Chairman for stability and continuity so that there is no vacuum. “This will be for a short time. A new permanent leadership will be in place,” he said. Tata Sons has already announced that a Selection Committee has been constituted to choose a new Chairman, and will complete its mandate in four months.
Sources said Cyrus Mistry, while taking crucial decisions was apparently not taking the old guard of Bombay House into confidence. Tata Teleservices’ row with NTT DoCoMo, a Japanese joint-venture partner, in which the group is disputing a $1.2 billion arbitration award against it and the move by Indian Hotels, which operates the Taj group of hotels, to sell overseas properties also went against Mistry, they said. The mess in Tata Steel’s European operations (the erstwhile Corus) and Mistry’s decision to sell the division created the impression among the old guard that he was selling Tata assets. “Essentially it was a clash of management style and culture “a person close to the group said.
In an interview to tata.com in September, Cyrus Mistry had said each Tata company will need to earn the right to grow. “It is not necessary for all our companies to be global leaders but they should aspire to be leaders in the markets they define for themselves,” Mistry had said.
“We will try and balance our portfolio to ensure that at an aggregate level we are more insulated from business cycles. We will continue to invest in our strong business-to-business enterprises, where we have powerful drivers for long-term value creation,” Mistry had said.