BENGALURU – Cyrus Mistry’s ouster is being seen by many as a desperate attempt by India’s largest conglomerate Tata Group to save its sagging image worldwide. 78-year old Ratan Tata returned to the helm of affairs in a dramatic fashion in a bid to stop the rut, as he was not happy with the way Mistry’s was working and the direction in which he was taking this sprawling company.
The unexpected and acrimonious sacking of Mistry on Monday has brought to light the divisions within the 148 years old conglomerate at a time when the Tatas are facing huge challenges both at home and away.
“Tata group is going through an economic crisis and most of its businesses are not performing well,” said G Chokkalingam, Managing Director, Equinomics Research & Advisory Pvt, said, reports ToI.
The drop in Tata Group’s revenue to $103 billion for the financial year ended March is also being seen as a contributing factor in the sacking of its Chairman.
One of its worst performers is Tata Steel, which witnessed a quarterly net loss of almost 32 billion rupees last month, as it winds back its European operations. Tata Motors is also not performing well because of the drop in sales of Jaguar Land Rover, while IT giant Tata Consultancy Services is also facing huge challenges because of the uncertain global market.
Ratan Tata believed by many as the shining light led the group for a span of 21 years, increasing the revenue from a modest 6 billion to 100 billion. But Chokkalingam stresses that Mistry’s ouster should not be seen as the end of a more prudent and pragmatic approach, saying Tata has no option but to reduce its size to balance the books.
Mistry became the first outsider to become the Chairman of the Tata Group, when he took charge in 2012. The sacking of Mistry points to a greater malaise and speaks volumes about the leadership vacuum within the Group.
Whoever succeeds Mistry at the end of the four-month period faces a tough challenge to maintain its international reputation that has been dented by its travails in Britain, where a large number of jobs are at risk. Tata may be reluctant to see the sale of assets he brought in, posing problems for his successor.
