The ousted chairman of Tata has issued an excoriating critique of the Indian conglomerate and its leadership as he accused the business of causing “immeasurable harm” to his reputation.
Cyrus Mistry hit back this week after Tata Sons, the corporation that owns Jaguar Land Rover and the Port Talbot steelworks, announced his departure with sources close to the firm citing a “lack of performance”. His exit followed disagreements with Ratan Tata, a scion of Tata’s founding family, who will take over as interim chairman until a successor is found.
Now Mistry has lashed out at the company and its senior executives in a lengthy email to board members, some of whom were present at the meeting that ended his tenure. He said he was “shocked beyond words” at being axed: “I cannot believe I was removed on grounds of non-performance. Apart from the invalidity and illegality of the business that was conducted, I have to say the the board of directors has not covered itself in with glory.
“To ‘replace’ your chairman without so much as a word of explanation and without affording him an opportunity of defending himself in a summary manner must be unique in the annals of corporate history.”
He said he was writing to “emphasise the total lack of corporate governance” at the company, warning that the abrupt decision and lack of explanation had “done my reputation and the reputation of the Tata Group immeasurable harm. All this does not augur well for the future of the group.”
The acrimonious nature of Mistry’s departure could herald future clashes because the Mistry family has an 18.4% stake in Tata Sons, the largest shareholding not held by the Tata family.
Mistry expressed his concern that a string of Tata businesses, including Port Talbot steelworks owner Tata Steel Europe, were likely to see their notional value slashed by $18bn (£14.7bn). “A realistic assessment of the fair value of these businesses could potentially result in a writedown over time of about Rs 118,000 crores ($18bn),” he said.
Mistry has been at the heart of negotiations with the German company ThyssenKrupp about merging their European steel operations, raising doubts about the impact his departure will have on the future of the Port Talbot site in Wales. Tata is also in talks with the UK government about financial support for Tata Steel UK, which employs 11,000 people, and a restructuring of the unit’s pension scheme. Tata has warned that Tata Steel UK will be included in a deal with ThyssenKrupp only if talks with the government are constructive.
Mistry reserved particular criticism for Ratan Tata, highlighting the appetite for expansion of the man he took over from in 2012 and citing plans for a partnership with Malaysia-based airline Air Asia as evidence. “Early into my tenure, our foray into the aviation sector began when Mr Tata ushered me into his office and handed me a report on Air Asia,” he said. He claimed Tata wanted to forge a partnership with Air Asia, something to which Mistry strongly objected. “My pushback was hard but futile.”
Mistry concluded by saying he had been forced into the position of a “lame duck” chairman. “While I would be lying if I said I am not disappointed, I have a sense of pride and dignity intact in the efforts I have taken to professionalise and institutionalise, regardless of the outcome if effort, I now witness.”
Analysts and investors in India were shocked by the sudden schism in the company. Tata has become renowned for long-term continuity and stability, with Ratan Tata spending more than two decades as chairman before making way for Mistry.
In a brief statement, the Mumbai-based Tata said on Monday that Mistry was stepping down after a “decision was taken at a board meeting held here today”. But the 148-year-old company, which makes a range of products, from cars to Tetley tea, gave no public reason for the surprise departure of Mistry after four years in charge. Tata said its committee would aim to find a new chairman within four months.
It also issued a rallying cry from Ratan Tata, urging the group’s various units “to act as leaders in their respective markets and enhance returns to shareholders”. “The companies must focus on their market position vis-a-vis competition, and not compare themselves to their own past. The drive must be on leadership rather than to follow,” said Ratan Tata.
