THE MYSTERY OF MISTRY - WILL REMAIN AN ENIGMA FOREVER?

By Ruma Dubey

It was after so many years of hunting that Ratan Tata had found the right candidate to fill his big shoes – Cyrus Mistry. His pedigree was legendary and also had his “Tata” connection. We all put a ‘tick’ in the right candidate box. Thus it came as a complete slap from the dark, taking one completely unaware, blinding for a second, when the news broke that this right candidate was not Mr.Right after all!

After closing bell, when all were ready to hang their boots for the day, news that Mistry has been asked to leave was met with complete shock and disbelief. Ratan Tata has now once taken charge as the Chairman on Tata Sons. A five-member panel comprising Ratan Tata, Lord Kumar Bhattacharyya, Venu Srinivasan, Amit Chandra and Ronen Sen has been entrusted with the task of finding a new Chairman within four months which is by Feb 2017. The hunt begins all over again!

Mistry would have completed four years on 28th Dec but this ouster or stepping down, whichever way one looks at it, seems like more or an unplanned and sudden decision. Though no reasons were given by the Tata group, speculation is rife and rumour mills are working overtime. Most confer than Mistry was asked to step down because apart from TCS, under his tutelage, no other Tata company really did well; in fact most languished and some went further downhill. One can blame it on the global environment and the fact that almost all major Tata companies are in the business of commodities, which is as such down in the dumps. So blaming the poor show of Tata companies entirely on Mistry might be unfair. Yet, at the same time, despite the poor environment, Mistry did not truly take any bold decisions. And it is here that the tattlers are furiously busy – they say that Mistry had planned on taking some path breaking decisions but this was not acceptable to the Tata Sons Board as they felt it challenged the ethos of Tata culture and tradition; the reason why Mistry had to leave. Then there is another school of thought which says that Mistry himself evinced a desire to step down as he had lost all interest or maybe the Tata Sons wanted him to bring about some radical changes, which he did not want to do.

We do not know the reasons but the situation is what it is. Many are expecting the Tata stocks to be pounded to pulp or exhibit extreme volatility when the markets open – that will be logical knee jerk reaction. But then the question which arises is – as investors do we need to worry?

No. Let us look at this from the other side. Maybe Mistry leaving is a good thing; with Rata Tata back at the helm, surely things look better. Yes, the hunt for the new “Tata” scion will be on but till they find the right person, no one could have run the Tata group better than Ratan Tata. His coming back should be viewed as a big positive or else, we could have this poor run for the group for many more years to come.

At the same time, this selection and ouster of Mistry smacks hard on the theory of finding the right candidate. It has today debunked the succession theory. Many who choose within the family might be feeling smug that they chose to stick to their own clan. Yet, Mistry was a part of the Tata clan to some extent; he was not a complete outsider. So what this “experimentation” does show is that it is better to have a thorough and proven outsider, a complete professional to run the show.

It took quite a few years for Mistry to be chosen and now the task to be find a new man/woman before end of February 2017. Now that’s a tall task indeed! Till then let us celebrate the return of Ratan Tata!

PS: The irony of life – when Ratan Tata took over from JRD, the markets sulked and the Tata group shares slumped. Today, the same man and his return is celebrated.

The letter sent by Ratan Tata to his employees: