NEW DELHI: In one of the most dramatic developments in the recent past, the Tata Sons on Monday dumped its chairman Cyrus Mistry with immediate effect and made Ratan Tata the interim chairman.
Tata will head the group for the next four months, till a search committee finds a new successor.
Mistry's journey with the Tata group has been a short one, with both his entry and exit being a surprise move.
When he was inducted as the chairman, the reactions were as surprising as they are today on his sudden exit. The reason being that Mistry himself was part of the panel that was tasked with finding a successor to the then chairman Ratan Tata.
And now, his four-year tenure has been cut short abruptly. His tenure as the chairman of the Tata Sons has been the shortest at the conglomerate.
Mistry, the only second non-Tata to take charge of the group after Nowroji Saklatvala in 1932, had to deal with various challenges in both Indian and global markets since he took charge.
Speculations are rife about the reasons for his sudden exit. The reasons range from reported differences between the Tata and Mistry to the company's declining performance under him.
While no reason was given for Mistry's sudden ouster, a group spokesperson said, "The Tata Sons board in its collective wisdom and on the recommendation of principal shareholder decided that it may be appropriate to consider a change for the long term interest of Tata Sons and the Tata group."
Here's a look at the possible factors that may have led to Tata Sons board taking this surprise decision against Cyrus Mistry in 'long-term interest'.
There were a few contrasts in the way Tata Sons operated under Mistry when compared to the tenure of his predecessor, Ratan Tata.
For example, Mistry undertook a strategy of divesting assets in contrast to what Ratan Tata did during his 21 years of chairmanship.
During Ratan Tata's chairmanship, the company was driven by his expansionist strategy that included overseas purchases like tea maker Tetley in 2000 and luxury car company Jaguar Land Rover (JLR) in 2008.
Mistry, on the other hand, was more focussed at tackling mounting debt by raising cash, refinancing loans and selling assets after writing them down.
Another stark contrast between Ratan Tata and Mistry's tenure is the conglomerate's market cap.
During Ratan Tata's tenure, the group's market cap rose from Rs 8,000 crore in 1991 to over Rs 4.62 lakh crore in December 2012. This was a mighty 57-fold increase.
On the other hand, Tata Group currently commands a listed market capitalisation of over $125 billion (close to Rs 8.5 lakh crore). This value was nearly Rs 4.6 lakh crore in December 2012 when Mistry took over from Ratan Tata. The means the market cap doubled while Mistry was in-charge.
It is also believed that Tata Sons was unhappy with Mistry's approach of shedding non-profit businesses, including the conglomerate's steel business in Europe, and concentrating only on cash cows.
Mistry's decision to sell Tata Steel UK in the wake of mounting losses, might also have been a sore spot within the organization.
Earlier this year, the company had completed selling of the European long products business that three units the UK as well as a mill in France to Greybull Capital.
There are also reports that over the past 6 months, serious differences had emerged between Ratan Tata and Cyrus Mistry.