Ratan Tata back in hot seat as Mistry dumped by In­dian go­liath

The Myanmar Times - - International Business -

IN­DUS­TRI­AL­IST Ratan Tata sen­sa­tion­ally re­turned to the helm of In­dia’s big­gest con­glom­er­ate as Tata Sons dumped Cyrus Mistry as chair in a shock an­nounce­ment that stunned an­a­lysts.

The 78-year-old takes in­terim charge of the sprawl­ing US$100 bil­lion tea-to-steel group al­most four years af­ter Mr Mistry suc­ceeded him to be­come the In­dian gi­ant’s first chief from out­side the Tata fam­ily.

The an­nounce­ment on Oc­to­ber 24 comes as Tata’s steel arm strug­gles to off­load its loss-mak­ing Bri­tish as­sets while its car­mak­ing busi­ness con­tin­ues to be plagued by weak sales and a dis­pute with Ja­pan’s NTT Docomo threat­ens to dam­age its rep­u­ta­tion.

The com­pany said that Ratan Tata had been named in­terim chair un­til a suc­ces­sor could be ap­pointed – a sur­prise come­back for the me­dia-shy in­dus­tri­al­ist, who made way for Mr Mistry in De­cem­ber 2012.

The search for a suc­ces­sor to Mr Mistry, 48, was likely to take four months, the com­pany said.

“The Tata Group is go­ing through a lot of problems and most of it was ei­ther in­her­ited, such as Tata Steel or Tata Mo­tors, or due to ad­verse eco­nomic con­di­tions like the IT busi­ness,” G Chokkalingam, man­ag­ing di­rec­tor at Mumbai-based Equinomics Re­search & Ad­vi­sory Pvt, told Bloomberg News.

“It is very dif­fi­cult to at­tribute it to lead­er­ship. There­fore it is shock­ing.”

Tata Sons is the hold­ing com­pany of the mas­sive Tata Group, ar­guably In­dia’s most fa­mous fam­ily con­glom­er­ate, which spans at least 100 com­pa­nies in as many coun­tries.

Its busi­nesses in­clude one of In­dia’s largest IT firms, Tata Con­sul­tancy Ser­vices, the big­gest ve­hi­cle maker Tata Mo­tors, and a ritzy ho­tel chain which in­cludes Mumbai’s Taj Ma­hal palace ho­tel.

Tata brands also fea­ture daily in the lives of In­di­ans, with prod­ucts rang­ing from salt to watches.

Mr Mistry was named as Tata’s chief more than a year be­fore he as­sumed the role. He is re­lated to the fa­mous In­dian fam­ily through his sis­ter’s mar­riage.

Ratan Tata, who took over as chair in 1991 and led the com­pany for 21 years, is cred­ited with build­ing it into a global be­he­moth.

Dur­ing his time at the helm, the or­gan­i­sa­tion went on a global pur­chas­ing spree, ac­quir­ing ma­jor names rang­ing from Tet­ley Tea to Land Rover and the An­glo-Dutch steel firm Corus in 2007 for $13.7 bil­lion.

How­ever, Mr Mistry’s time in charge has been rocky and the group, founded un­der Bri­tish colo­nial rule in 1868, has hit head­winds of late with lack­lus­tre per­for­mances at sev­eral com­pa­nies in­clud­ing Tata Mo­tors, Tata Power and Tata Steel.

Prof­its at In­dia’s IT out­sourc­ing com­pa­nies are also be­ing squeezed as the slug­gish global econ­omy sees clients rein in their spend­ing.

The group’s rev­enue slipped 4.6 per­cent for the fi­nan­cial year ended March to about $103 bil­lion, hurt by global eco­nomic un­cer­tainty, a crash in com­mod­ity prices and volatil­ity in cur­ren­cies, ac­cord­ing to Bloomberg.

It has been try­ing to off­load its loss-mak­ing Bri­tish steel as­sets for sev­eral months but has so far been able to find a buyer. More than 15,000 jobs at its plant in Port Tal­bot, Wales, are at stake.

Mr Mistry been un­able to re­solve a long-run­ning dis­pute with Docomo which is de­mand­ing that Tata cough up a $1.17 bil­lion ar­bi­tra­tion pay­ment awarded to the Ja­panese mo­bile phone op­er­a­tor at an in­ter­na­tional hear­ing.

In Au­gust Tata Mo­tors re­ported a 57pc fall in quar­terly prof­its, slowed by weak sales of its lux­ury Bri­tish unit Jaguar Land Rover and for­eign ex­change losses.

“Mistry was not giv­ing di­rec­tion to the in­di­vid­ual com­pa­nies so Ratan Tata has prob­a­bly just got frus­trated and taken back the chair­man­ship,” a com­pa­nies an­a­lyst, who asked not to be named, told AFP.

Mr Mistry’s sis­ter is mar­ried to Ratan Tata’s younger half-brother Noel, who was ini­tially ex­pected to be the group suc­ces­sor and is now tipped by some an­a­lysts to get the top job. –

Photo: EPA

Cyrus Mistry was Tata chair for four years.

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