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Cyrus Mistry’s first tryst with life under a spotlight had ended in darkness

Mistry’s grandfather had first bought shares in Tata Sons in the 1930s, a stake that currently stands at 18.5 per cent and is held by the Mistry family. Cyrus was the brother-in-law to Noel Tata, Ratan Tata’s half-brother.

Cyrus Mistry, Ratan Tata, Tata Group, Business news, Indian express business news, Indian express, Indian express news, Current AffairsCyrus Mistry

In 2012, a five-man selection team, which included Cyrus Mistry himself, had spent 15 months searching for a successor to Ratan Tata at the corner office of Bombay House, the Tata headquarters in Mumbai. At the end of it all, the succession process proved to be an anti-climax as the selection committee found the “guy sitting with them” as the most suitable for the post.

That was the low-profile Cyrus Mistry’s first tryst with life under a spotlight — something he had shunned all along till then. He guarded his “man in the background” image fiercely as he kept avoiding the centrestage and didn’t give a single media interview as chairman of Tata Sons.

The guard came off only after he was unceremoniously ousted from chairmanship after a brief almost four-year period on October 24, 2016. His father, a reclusive billionaire with an estimated wealth of $7.6 billion according to Forbes, had reportedly paved the way for his younger son’s ascendancy to the top of a group founded by Ratan Tata’s great-grandfather.

The mangled remains of the car in which Cyrus Mistry and others travelled. (Express photo by Deepak Joshi)

Mistry’s grandfather had first bought shares in Tata Sons in the 1930s, a stake that currently stands at 18.5 per cent and is held by the Mistry family. Cyrus was the brother-in-law to Noel Tata, Ratan Tata’s half-brother. Though the exit was bitter, Mistry’s stint cannot be faulted in terms of performance. The group annually outperformed the Sensex by 5 per cent in market capitalisation during his tenure and the group companies saw a near 35 per cent annual jump in profits.

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According to various filings made by Mistry in his long legal battle with the Tata Group over his exit, his tenure also saw a 100 per cent rise in the patent filings, which along with other measures saw $5 billion gain in the group’s brand value. It was precisely due to these reasons that Mistry’s sudden sacking was received with shock in the corporate circles.

The car being shifted from the accident spot using a crane. (ANI)

According to corporate observers, the restructuring which Mistry was trying to bring about in the businesses of certain group companies did not have the backing of Ratan Tata, and his failure to cement the differences on these fronts led to his ouster.

After his ouster, Mistry talked about the legacy problems and his differences with Ratan Tata. The areas of discord were Tata Steel’s European venture, the Nano car and telecom services, the businesses from which Mistry wanted to get out. This became clear when, in 2017, Mistry issued a statement on the Nano project and how it proved to be a failure.

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He said that Tata Motors had taken a unanimous decision to discontinue production of Nano, which was a loss-making venture, almost a year back, but it still continues to be manufactured at a sub-scale level. He also alleged that “the practice of lending without adequate risk assessment” particularly in Nano and small commercial vehicle segment (SCV) caused huge NPA loss to the tune of Rs 4,000 crore to the company and Tata Motor Finance.

Mistry had termed Tata’s decision to acquire London-based Corus for over $12billion in 2007 as “one man’s ego” and against the reservations of some board members and senior executives. He had stated that this was available for less than half the price a year.

The mangled remains of the car in which Cyrus Mistry and others travelled. (ANI)

Later in 2016, Mistry decided to wind off Corus’ operations and sold it off for a token amount, even though he was sacked before the closure of the deal.

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“Mistry wanted to bring in corporate governance in the group and a group that would be managed by the board rather than one run by shadow directors. His fight was for corporate governance and rights of minority shareholders,” C Aryama Sundaram, senior counsel who appeared on behalf of Cyrus Mistry in the Mistry-Tata legal tussle, said. Mistry is also understood to have been uncomfortable with Ratan Tata’s relationship with C Sivasankaran, the promoter of Sterling Infotech. On its part, Tata Group rebutted all the allegations levelled by Mistry.

Since Mistry’s departure from Tata Sons, Nano got phased out and the Tata Group later also exited the telecom services business.

During his chairmanship, Mistry depended on a specially created group executive council (GEC) consisting of handpicked executives from within Tata Group, industry executives and also academia to drive operations. He was termed as a studious backroom executive who had a sharp mind.

Later, Tata Sons was converted into a private limited company from a public company. Since Mistry’s family has an 18.4 per cenr stake in the firm, they could as a result of this move, sell their stake either to Tata Group or any third party only with its consent. The valuation of the stake would also require their consent. As a result, Mistry and his family lacked a board seat as well were handicapped to sell their stake.

Mistry was first elected as the deputy chairman of Tata Group in 2011, and Ratan Tata had then said in a statement that the appointment is a “good and far-sighted choice”.  FE

First published on: 05-09-2022 at 02:42 IST
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