Tata chief ousted in shock move

India's Tata Group's interim Chairman Ratan Tata leaves Bombay House, the company's head office, in Mumbai on Oct 25, 2016.
India's Tata Group's interim Chairman Ratan Tata leaves Bombay House, the company's head office, in Mumbai on Oct 25, 2016. PHOTO: AFP

NEW DELHI • The surprise removal of Tata Sons' chairman Cyrus Mistry and his advisory team, and the temporary return of Mr Ratan Tata, could distract the salt-to-software conglomerate from ongoing efforts to trim debt and reshape some of its businesses.

The boardroom coup, announced late on Monday, sent shares in some Tata listed companies lower yesterday, though the reinstatement of the widely-respected Mr Tata as interim chairman likely helped ease investor concerns.

Some analysts expect uncertainty at Tata may stall some ongoing initiatives, such as the search for a partner for Tata Steel's struggling UK assets.

"Under Mr Mistry, Tata Group has taken significant steps towards deleveraging and better utilisation of capital," Citigroup said in a client note yesterday, adding that his absence may impact the group's future strategy and delay the "process of deleveraging".

Media reports following Mr Mistry's ousting suggested the influential Tata family, which owns a majority stake in Tata Sons through a series of trusts, was unhappy with some of his decisions as chairman.

Mr Tata yesterday urged those in charge of Tata Group companies to focus on their businesses and shareholder returns, and not be distracted by the board changes.

Those group companies own a range of well-known brands, including Jaguar Land Rover, Tetley tea, Titan and the Taj Group of hotels.

"The companies must focus on their market position vis-a-vis competition, and not compare themselves to their own past," said Mr Tata.

Said a senior banker and frequent investor in Tata group's bonds: "At a business level, life doesn't change for us due to this management re-jig... What we need to see is what kind of strategy they will adopt now to revive their weak companies."

Mr Mistry's dismissal as chairman - he remains a board member - stunned even Tata insiders and senior executives, people in the company said. Tata has disbanded the group executive council - a core advisory team - set up by Mr Mistry, who was trying to shake up the US$100 billion (S$139 billion) company through changes to its management structure and the introduction of new faces at senior levels.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 26, 2016, with the headline 'Tata chief ousted in shock move'. Print Edition | Subscribe