Ratan Tata vows ‘stability’ after shock sacking

AFP

Family patriarch Ratan Tata sought
to reassure rattled investors of stability at India’s biggest conglomerate Tuesday 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 $100 billion 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 on Tuesday 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 on Tuesday.
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 $13.7 billion.
However parts of the group’s business have been struggling of late, with Tata Steel finding it difficult to offload its loss-making British assets and Tata Consultancy Services being squeezed by the sluggish global economy as clients rein in spending.
Founded in 1868
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.
Tata Steel sank 2.50 percent in afternoon trade, IT giant Tata Consultancy Services was down 1.19 percent, with car manufacturing giant Tata Motors also in the red.
Mistry squashed speculation that he was considering legal action over his dismissal.
“While the circumstances are being studied, there is no basis to media speculation about litigation at this stage. As and when a public statement becomes necessary, it would be made,” read a statement released by the Shapoorji Pallonji Group. The group, founded by Mistry’s father, is a major shareholder in Tata Sons and had reportedly been ready to claim that it was illegal to sack the chairman without a 15-day notice period.