What made Tata group chairman Cyrus Mistry to quit?
Cyrus Mistry did not quit as the chairman of Tata Sons; he was removed from his position by the board of Tata Sons on October 24, 2016. The reasons behind his removal were not explicitly stated by Tata Sons, but they mentioned a growing trust deficit and departures from the culture and ethos of the Tata Group1. Several factors contributed to his ouster:
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Performance Issues: Mistry faced challenges in improving the financial performance of some Tata Group companies. For instance, he struggled to sell the troubled steel business of Tata Steel, which had acquired Corus in 20075.
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Strategic Decisions: Mistry's decisions to exit certain businesses, such as the Nano car project and the telecom sector, were not aligned with Ratan Tata's vision. The Nano project was consistently loss-making, and exiting the telecom business would have required significant financial outlays5.
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Welspun Energy Acquisition: Mistry's handling of the acquisition of Welspun's solar farms by Tata Power in June 2016 without proper board approval was seen as a significant issue25.
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NTT Docomo Dispute: Mistry's stance in the legal battle with NTT Docomo, which resulted in Tata Sons being ordered to pay $1.17 billion in damages, was another point of contention5.
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Governance and Ethical Concerns: Mistry emphasized the need for better governance and ethical practices, which reportedly caused discomfort among some stakeholders3.
After his removal, Mistry resigned from various Tata companies to avoid disrupting operations and pursued legal action against Tata Sons and Tata Trusts34.