Why Mistry had to go--speculations continue

The markets have reacted sharply on removal of Cyrus Mistry at the helm of affairs with the Tata Sons. Stocks of the Group responded to the development and witnessed sharp fall irrespective of markets' conditions and also global markets' behaviours. It is widely believed that the dwindling relation between Mistry and Tata Trust is the sole reason of Mistry’s removal.

The philanthropic trust which includes the larger ones like Sir Dorabji Tata Trust and Sir Ratan Tata Trust, together control about 66 per cent of Tata Sons, the group holding company that was created by the families of the sons of founder Jamsetji Tata and are still largely under the family’s grip.

As per some media reports, there was a fundamental disconnect between Mistry and Tata, particularly about ethos, values, vision and the direction that the Group was headed in. Detailed letters were sent to Mistry asking him to spell out his vision, five-year plan, etc, but the responses were vague and non-specific. Things got aggravated as the chairman of Tata Sons and Tata Trusts were not the same individual.

Several of Mistry’s decisions, including the disposal of some of Indian Hotels Co.’s overseas properties and especially the move to shut the UK steel operations, did not go down well with Tata Trusts.It is now learnt that Mistry may seek legal recourse subsequent to the development, which shocked India Inc.