Like Julius Caesar crossing the Rubicon to mark the beginning of a civil war in the Roman Republic — the commissioning of an irreversible act – the die has been cast by the board members of Tata Sons (read Ratan Tata) by sacking group chairman Cyrus Mistry in what constitutes the most sensational shake-up in the history of corporate India.
October seems to be the cruellest month for Ratan Tata, interim chairman of Tata Sons, the holding company of Tata Group – a Mumbai-based global business conglomerate. It was on a sultry afternoon on October 3, 2008, when Tata’s dramatic press conference in Kolkata pulled the plug on the much-vaunted Nano hatchback project in Singur, West Bengal, following prolonged agitation and political unrest, led by Mamata Banerjee, the then principal opposition leader in the state, over what was termed as forceful acquisition of farmland for the small-car factory. The Nano was Tata’s dream project, to let the Indian middle-class upgrade from two-wheelers to a hatchback for a mere Rs100,000 price tag (Dh5,555).
“If someone puts a gun on my head, I say either you remove the gun or pull the trigger. Ms Banerjee has pulled the trigger.” With these words, Tata, then the chairman of Tata Group, brought the shutter down on the Nano factory in Bengal and moved to Sanand in Gujarat, from where the world’s cheapest passenger car ($1,500) finally rolled out months later.
Exactly eight years since that press conference in Kolkata, someone seems to have “pulled the trigger” on Tata – yet again! The difference being that this time, the wound has come in the shape of an unkindest cut from a person who is very close to the 78-year-old corporate doyen.
Mistry, the 48-year-old former chairman of Tata Group, had sent an email last week to all the board members of Tata Sons, launching a scathing attack on what he termed as impractical ways of running the conglomerate, where the emotional quotient and personal passions of Ratan Tata held sway over hard business decisions. Mistry’s bombshell was leaked into public domain a day after the board members at Tata Sons announced their decision to replace him on October 24.
While the exact reasons behind Mistry’s summary sacking, just four years after he was hand-picked by Tata himself for the top job, are yet to be made public, it is quite evident that the jibe at Tata is too much of a humiliation for the corporate behemoth to digest. Apart from questioning the efficacy of investing in such loss-making ventures as the Nano car project and forging business alliances with Air Asia (Air Asia India) and Singapore Airlines (Vistara) – all of which are yet to turn out any convincing figures on the group’s balance sheet — Mistry actually dug the dagger deeper when he alleged that investigation had revealed fraudulent transactions by group companies to the tune of Rs220 million involving bogus entities in India and Singapore.
Mistry’s summary removal and his allegations have made Tata face the biggest challenge of his career ever since he joined the group in 1961. A Harvard Business School alumnus, Tata took over the reins of the Tata Group when JRD Tata stepped down as chairman of Tata Sons, naming him the successor in 1991. During his 21 years at the helm, Tata group revenue grew almost 100 times, from $1.5 billion in the 1990s to $100 billion in 2012. It was under his stewardship that Tata Consultancy Services emerged the first Indian IT company to cross a billion dollars in revenue. With Tata Tea acquiring Tetley, Tata Motors buying Jaguar Land Rover and Tata Steel picking up Corus, the Ratan Tata model of business acquisitions put India Inc on the global corporate map like never before.
Commitment to corporate ethics
Not just as a visionary entrepreneur and leader of a conglomerate with footprints in more than 100 countries around the world, but Tata has also earned enormous respect in business circles within India and abroad for his commitment to corporate ethics, employee welfare and social responsibility.
A visit to the sprawling Tata Steel factory-complex at Jamshedpur, in the state of Jharkhand, confirms this. Even a casual banter with an employee, irrespective of his or her rank, is bound to veer into the territory of the Tatas as not just fair employers but care-givers to the core.
As one of the foremost members of the Parsi community in India, Ratan Tata has always held this firm belief, like the rest of his community members, that wealth is to be created not only for one’s personal gains, but for the welfare of the society as well. In fact this is what sets the Parsi business community apart from other entrepreneurs in India. As for the Tata Group, corporate social responsibility has been baked into its DNA right since the time of Jamshetji Nusserwanji Tata, founder of the Tata Group of companies, in the late 19th century.
Ratan Tata is cut from that same dice and he has held his own even under the most challenging of circumstances. After all, it is no easy task to lead a group as diverse as this in a third-world country like India, with all its economic and socio-political idiosyncrasies.
The Parsis are known to be a very closely-knit community. However, with Mistry, also a Parsi, questioning his tendency to prioritise matters of personal likings over business objectives, the legacy of Ratan Tata is in danger of being sullied by a very ugly public spat. To what extent he can stay away from the mud-slinging and maintain his aura is really the challenge for the patriarch in the twilight of a long and largely noncontroversial career.
You can follow Sanjib Kumar Das on Twitter at www.twitter.com/ @moumiayush