A few days ago, another blow was dealt in the war between Cyrus Mistry and the Tata Group, when Tata announced that it would cut all ties with the Shapoorji Pallonji group, the company which is run by Cyrus Mistry and his brother Shapoor Mistry and has an 18.5% stake in Tata Sons.
How it all started
This move comes nine months after Mistry was unceremoniously fired as the head of Tata Sons, a decision which he has been fighting in courts till now. This decision came after there was talk of a disconnect and bad faith between Ratan Tata and Mistry. In fact to quote ET “There was a fundamental disconnect between Mistry and Tata, particularly with regard to 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.“
This move is basically the second last step to sever all ties between the two companies, who have been involved closely with each other for over 80 years and have shared a very good personal and business equation. It also spells trouble for the 50 odd SP group companies who will be impacted by this decision.
However, in a statement released by the SP group, they have claimed that
“The SP Group said that during Mistry’s tenure as chairman of Tata Sons, he had issued a directive to all Tata group companies to ensure that no new engineering and construction contracts were awarded to the SP group.
Orders from the Tata Group fell from Rs 1125 crore in 2012-13 to zero in 2015-16, when Mr. Mistry was the Chairman of Tata Sons. Any residual orders pending is extremely insignificant in value for the SP Group”
Be that as it may, all that the industry is talking about is that whether this decision was simply the result of the Tata’s ego and one-upmanship or is it just a move based entirely on righteousness?
Tit for Tat?
When Mistry came on board the Tata Group, he didn’t fit the mold, there were problems from the get go. Many of Mistry’s decisions did not sit well with the Tata Group including the disposal of some of Indian Hotels Co’s overseas properties and the decision to shut the UK steel operations, as they were considered Ratan Tata’s jewels.
He was also reportedly said to not have a proper plan and gave vague and nonspecific responses.
In fact to again quote ET “Tata Trusts were of the view that the group under Mistry had not been able to take into account the sensitivity of shareholders as well as the global ecosystem in which the group companies operate “
This behavior on Mistry’s part might have aggravated the Tatas to such an extent that they wanted to show their dominance and send the message that they would not tolerate any unruly or disrespectful behavior.
The Tatas are well known for their affection towards revenge as in 1998, after the failure of the first Tata Indica, when Ratan Tata went to Ford to sell his car business, he was told “They told us ‘you do not know anything, why did you start the passenger car division at all’. They said they will do us a favor by buying our car division”
10 years later, Tata bought Jaguar from an ailing Ford. Revenge. Served.
Or just a case of setting the record straight?
Although it might be simply a case of one upmanship, it also might be a case of setting the record right. Of adhering to the morals and codices that make up Tata and have been it’s guiding light for all the years of its existence.
Tata is a 150-year-old company, with an empire that spans across the globe. It has forayed into nearly all the markets that exist and has made a name for themselves there. This didn’t happen by sheer luck, it took effort and hard work and the inculcation of a culture of values and ethics to get where they are.
Any attack on this culture would be an attack on Tata’s foundation itself and would be met with resistance, as it was. This decision might just have been one to set all records straight and severe ties with someone who was hurting what Tata stood for.
Be it any reason, one fact is clear, the war between these two companies is about to get uglier. Historically, when two giants have fought, the market has turned volatile and suffered a bit accordingly. No amount of predictions can tell us what will happen next, all we can do is wait and watch out.
Image Credits: Google Images
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