Why was cyrus mistry removed?
Cyrus Mistry was removed as the Chairman of Tata Sons in October 2016 due to a combination of factors that led to a significant deterioration in his relationship with Ratan Tata and the Tata Trusts. Here are some key reasons:
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Divergent Business Strategies: Mistry's practical and cost-cutting approach, which included plans to exit non-profitable businesses and sell off certain assets, conflicted with the traditional ethos of the Tata Group. His decisions, such as considering the sale of Tata Steel's European operations and winding down the Nano project, were seen as undermining Ratan Tata's legacy12.
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Power Dynamics: Ratan Tata retained control over the Tata Trusts, which hold significant shares in Tata Sons, creating a power imbalance. Mistry did not have the full authority typically associated with his position, as he was not made chairman of the Sir Dorab Tata Trust1.
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Communication and Trust Issues: There were reports of Mistry making decisions without fully consulting Ratan Tata or other key stakeholders, which further strained their relationship. For instance, the acquisition of Welspun's solar farms by Tata Power was finalized without Ratan Tata's explicit approval2.
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Performance and Legacy Concerns: While Mistry's tenure saw Tata shares perform better than the average on the Bombay Stock Exchange, there were concerns about the performance of some Tata Group companies under his leadership. Additionally, his handling of disputes like the one with NTT DoCoMo was criticized23.
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Legal and Governance Issues: The removal was also influenced by legal considerations, with the Tata Trusts seeking to ensure that the action would withstand legal scrutiny. However, Mistry's removal was initially deemed illegal by the NCLAT, though this decision was later overturned by the Supreme Court34.