India’s Tata Group’s interim Chairman Ratan Tata (second left) leaves Bombay House, the company’s head office, in Mumbai, yesterday.
Mumbai: Family patriarch Ratan Tata sought to reassure rattled investors of stability at India’s biggest conglomerate yesterday after the sudden sacking of chairman Cyrus Mistry sent Tata company shares falling.
Seventy-eight-year old Tata has taken interim charge of the sprawling $100bn tea-to-steel Tata Group, after Mistry was abruptly dumped on Monday evening, four years after being appointed chairman.
The sacking stunned the Indian business world and sparked a fall in shares at Tata Sons firms yesterday as Indian media carried reports that Mistry could take legal action.
Tata, who had stepped down as chairman after two decades and was replaced by Mistry in 2012, held some two hours of talks with CEOs of TATA’s numerous companies at the group’s headquarters in Mumbai.
According to a company statement after the meeting, Tata told them he had assumed the chairmanship “for stability and continuity so that there is no vacuum”. Tata told them to focus on their respective businesses and not be distracted by the leadership change.
“This will be for a short time. A new permanent leadership will be in place,” the statement quoted Tata as saying. The search for a successor to Mistry was likely to take four months, Tata Sons said in a short statement on the dismissal on Monday.
Tata Sons is the holding company of India’s most famous family conglomerate which has at least 100 companies in its portfolio spanning as many countries. Tata is credited with building it into a global behemoth during his time at the helm.
Under his leadership, the organisation went on a global purchasing spree, acquiring major names ranging from Tetley Tea to Jaguar Land Rover and the Anglo-Dutch steel firm Corus in 2007 for $13.7bn. Mistry was declared heir to Tata in November 2011, a year before he took over the top position. He became only the sixth chairman in the almost 150-year history of the Indian giant which was founded by Parsi industrialist Jamsetji Tata in 1868. The abruptness of Mistry’s sacking was uncharacteristic for the company, with analysts claiming Tata had finally lost patience with the 48-year-old’s failure to resolve a long-running $1.17 billion arbitration dispute with NTT Docomo and his focus on divesting non-profitable businesses. Mistry squashed speculation that he was considering legal action over his dismissal.
Tata Sons stocks fall
Mumbai: Shares in Tata Sons companies fell in early trade yesterday after India’s biggest conglomerate shocked the Indian business world and abruptly sacked its chairman Cyrus Mistry.
Shortly after the Bombay Stock Exchange opened Tata Steel sank 2.89 percent, car manufacturing giant Tata Motors fell 1.17 percent and IT giant Tata Consultancy Services was down 0.75 percent.
The announcement came as Tata Steel struggles to offload its loss-making British assets while Tata Motors struggles with weak sales. Mistry had been unable to resolve a long-running dispute with NTT Docomo, which is demanding the giant coughs up a $1.17bn arbitration payment awarded to the Japanese mobile phone operator at an international hearing. The issue threatens to damage its international reputation.
Profits at India’s IT outsourcing companies are also being squeezed as the sluggish global economy sees clients rein in their spending. The Tata Group spans at least 100 companies in as many countries. Its brands feature daily in the lives of Indians, with products ranging from salt to watches.
