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24
October 2016
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| Tata Sons Group (The Total Investment & Insurance Solutions) |
In a sudden turn of events that has
stunned the corporate world, Ratan Tata, the corporate icon, who retired in
2012 as chairman of the Tata Group is back at the helm. Tata Sons, the holding
company of the Tata conglomerate, on Monday appointed Mr Tata as interim
Chairman for four months replacing Cyrus P Mistry. The Board of Directors at
Tata Sons in its meeting on Monday also appointed a panel to search for new
Chairman for the Tata Group. The Total Investment & Insurance
Solutions
The Selection Committee includes
Ratan Tata, Venu Srinivasan, Amit Chandra, Ronen Sen and Lord Kumar Bhattacharyya.
The Committee has been given four months to choose new Chairman for Tata Sons. The Total Investment
& Insurance Solutions
A spokesperson from Tata Sons told
IANS that the replacement of Cyrus Mistry as Chairman of Tata Sons was done
keeping in mind the "long-term interest" of the company. "The
company's Board and the principal shareholders in its collective wisdom took
this decision, which they thought may be appropriate in the long term interest
of Tata Sons and the Tata Group. There is no change in the CEOs at the
operating level," the spokesperson added. The Total Investment
& Insurance Solutions
Ratan Tata, who helmed the group for
21 years after being chosen successor by his uncle, the legendary JRD Tata, in
1991, is credited with transforming the group through bold but controversial
decisions including large global acquisitions, even as some of its peers
struggled to stay relevant post economic liberalisation. Among his notable
acquisitions, starting from Tetley by Tata Tea for $450 million in 2000, were
steelmaker Corus by Tata Steel in 2007 for 6.2 billion pounds and the landmark
Jaguar LandRover in 2008 for $2.3 billion by Tata Motors. The Total Investment
& Insurance Solutions
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Tata tweets (The Total Investment & Insurance
Solutions)
Mistry, who has been with the group
since 2006 in various capacities, hails from the Shapoorji Pallonji family, the
largest private shareholder of the group's holding company Tata Sons. At 43, he
was a quiet and unassuming person who appointment brought to an end, years of
speculation over who will step into Ratan Tata’s shoes. The Total Investment
& Insurance Solutions
Rata Tata’s return is surprising
because the Tatas conducted an elaborate search for a successor for several
years with a formal five member committee being set up in 2010, which drew a
blank. All through, close observers of the group have always maintained that
the successor will not only be an internal choice but would be from the
Shapoorji Pallonji Mistry family – in effect the choice would be between Noel
Tata and Cyrus Mistry.
Noel, who is Pallonji Mistry’s son-in-law
and Ratan Tata’s half-brother had the big advantage of the Tata surname. But he
had limited global experience and apparently little interest in handling the
giant corporate empire of over 100 companies with several formidable CEOs and
nearly 400,000 workers. The quiet Cyrus Mistry was seen as more capable and was
considered the more likely choice. The Total Investment & Insurance
Solutions
Those who know the financial
strength of the Shapoorji Pallonji group would be doubly surprised by this
ouster. It is one of the wealthiest families in India. Ironically, the group
owed its growth to the Tatas – in particular AD Shroff, a financial wizard of
the Tata group in the 1950s. Shroff, who was chairman of Bank of India and New
India Assurance (in the pre-nationalisation days), was approached by Shapoorji
Pallonji Mistry for financial help, when he was relatively a small construction
contractor struggling to find collateral for his borrowing. Shroff not only had
the loan sanctioned on his personal informal guarantee as chairman, but also
helped Shapoorji by giving him construction contracts from New India Assurance.
The Mayfair buildings at Mumbai’s posh Malabar Hill were among those that
helped Shapoorji build his business and his reputation. For decades after,
Shapoorji used to be demonstrably grateful to Shroff. The relationship ended
abruptly and badly after Shroff died. The Total Investment & Insurance
Solutions
However, the Shapoorji group
continued to grow rapidly. Old timers say that one of Shapoorji’s key strengths
was his ability to spot a deal, especially the kind where he got equity in
return for financial help. So when Dorab Tata wanted to sell a chunk of his
equity in anger, he found a ready buyer in the Shapoorji Mistry. The rest is
history and for those who know the group, the appointment of Cyrus Mistry was
part of this inexorable process too. Therefore, Ratan Tata’s return has
completely upset all logical calculations.The Total Investment & Insurance
Solutions
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