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Old 7th November 2016, 18:31   #181
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

Even assuming all of Ratan Tata's (and the board's) 'grievances' against Mistry are true (though there's plenty to suggest otherwise), it only makes him/them look worse by adding a huge question mark against his/their judgment in picking Mistry in the first place.

There's no way Tata (Ratan and/or the group) come out of this looking better, and 'how much worse?' still remains to be seen.
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Old 7th November 2016, 19:56   #182
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

Looks like this was a planned move by the SP group right from the beginning, when the search for a new chairman started. Mr Ratan Tata was left with no choice but Cyrus Mistry and must have said YES unwillingly and must have asked him to follow the group's principles.

Cyrus must have said YES at that time, but had different plans.

Mr Ratan Tata probably saw the deviation from the original commitment and has moved in swiftly to save the legacy of his forefathers.
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The crux of the Tata world view, said Morgen Witzel, a U.K.-based author of a book on the Tata company, is shareholder value should not be an end in itself. "Companies are not machines for making money. They exist to provide value and service to their communities; profit is a by-product of that process."

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Old 7th November 2016, 20:11   #183
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Let's turn the debate on the fundamental issue due to which this removal happened.

Had it been a correct move on the part of Tatas, to oblige with the contractual terms between Tata Tele Services Limited and NTT DoCoMo, to buyback the stake of NTT DoCoMo at half the price at which the said NTT DoCoMo had invested in Tata Tele Services Limited?
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Old 7th November 2016, 20:24   #184
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

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Originally Posted by F150 View Post
Looks like this was a planned move by the SP group right from the beginning, when the search for a new chairman started. Mr Ratan Tata was left with no choice but Cyrus Mistry and must have said YES unwillingly and must have asked him to follow the group's principles.
Is the SP family that un-related to the Tata's - apart from the family name ?

Was Tata left with no choice other than Cyrus ? Earlier posts indicate Cyrus was the un-willing guy.

The profit part would be for the companies. But the Trusts themselves would continue with their philanthropic activities. More profits would only mean more comfort in continuing with what they had planned. The profits angle doesnt seem to add up.
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Old 7th November 2016, 21:27   #185
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

As far as the Docomo issue goes, Tata Tele has deposited the entire money with the court, to prove that they do not want to contest the amount or withhold it. The only issue is the RBI regulations. So it's untrue to say Mistry did not honour the commitment. Tata hasn't explained how he will pay the amount without violating the RBI rules.

It would be childish to suggest the SP group influenced the selection of the chairman after Tata. Tata wasn't the only selector. There were other luminaries in the committee too. Are you saying these people are fickle minded or so easily influenced that the SP group exploited them to get Cyrus selected for the position? Any evidence to suggest so?

And did Tata take four years to realize this mistake? Speaks volumes about his choice of people. Even assuming he found Mistry was not the right choice, was this the way to remove him and his team? Tata hasn't even managed to make a clean job of it, it's just a big big mess and Tata will be the biggest loser at the end of it.

And now it seems after the Indian Hotels independent directors backed Mistry, Tata Sons is making veiled threats of withdrawing the guarantees it had given to IHCL, and one of their PR people have also questioned the independence of these directors, 'hinting' that they received financial favours in exchange for backing Mistry.

It appears as though Tata Sons has been spreading baseless rumours to damage Mistry's name and attack personally any office bearer or director who will back him.
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Old 8th November 2016, 00:24   #186
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

Remember: Ratan Tata is more or less the 'last' Tata who can 'command' trust in the Tata ethos, imperfect as this last may be but vastly proven and pretty rare in the Indian commercial/business context, including abroad/globally, especially in the auto industry, in IT, and in the UK and the USA.

Mr. Mistry may've been, whether cynically or in good faith (since his family IS an old and very large stakeholder in any case) seen to be too-quickly and too-hastily/carelessly trying to become the de facto 'promoter group' of Tata Sons? Talking interpretations here, on Tata Sons' part, not 'facts'.

Remember also that it was Mr. Tata himself who selected Mr. Mistry.

So, it obviously is something much greater than mere 'ego', than a case of "after me, the deluge" on Ratan Tata's part.

IMO Mr. Tata and Tata Sons trustees etc have access to facts that suggested TO THEM (they may of course be overreading matters or have fears more than actual grief on the quality of Mr. Mistry's work so far) a more-'political'-type problem with mr. Mistry's continuance, given of course (a) his family's large shareholding and (b) one does not know the facts and this is partly speculative, but: certain decisions made or left-unmade based on seen-to-be dubious premises, if i had to bet a lot of money, premises that involved bad or at least erroneous/mismanaged quid pro quo-s with 'outside/alien powers' AND/OR the modus operandi+attitudes corresponding to such 'alien'-to-the-Tata-ethos powers/entities. Whether these last were from the Indian finance world and/or the party-political one is the only doubt i personally have?

If this reading is true enough, then Mr. Tata's decision and Mr. Mistry&family's refusal of it will lead to clarity soon on who/what those entities were/are, as the companies' boards meet and/or egm-s are precipitated (voting patterns by large financial institutions, including 'public' sector ones, and opinions expressed in public.)

At any rate, it's doubtful Tata Sons were or are unaware of the risks to good name and to share prices etc as the working-through of this CLEARLY 'political'=business-ideological-cum-battle-between-THE-threatened-promoter-group-and-their-largest-minority-shareholding-family conflict happens.
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Old 8th November 2016, 05:37   #187
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Originally Posted by honeybee View Post
As far as the Docomo issue goes, Tata Tele has deposited the entire money with the court, to prove that they do not want to contest the amount or withhold it. The only issue is the RBI regulations. So it's untrue to say Mistry did not honour the commitment. Tata hasn't explained how he will pay the amount without violating the RBI rules.
Why do they need to explain?

They entered into the contract in '09, the shareholders did not object, nor did the law prevailing at that time prohibited them to do so. Now the policy has changed. Why ask Tatas any questions? It's a policy flip flop.
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Old 8th November 2016, 09:59   #188
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

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Originally Posted by desdemona View Post
...
IMO Mr. Tata and Tata Sons trustees etc have access to facts that suggested TO THEM (they may of course be overreading matters or have fears more than actual grief on the quality of Mr. Mistry's work so far) a more-'political'-type problem with mr. Mistry's continuance, given of course (a) his family's large shareholding and (b) one does not know the facts and this is partly speculative, but: certain decisions made or left-unmade based on seen-to-be dubious premises, if i had to bet a lot of money, premises that involved bad or at least erroneous/mismanaged quid pro quo-s with 'outside/alien powers' AND/OR the modus operandi+attitudes corresponding to such 'alien'-to-the-Tata-ethos powers/entities. Whether these last were from the Indian finance world and/or the party-political one is the only doubt i personally have?

If this reading is true enough, then Mr. Tata's decision and Mr. Mistry&family's refusal of it will lead to clarity soon on who/what those entities were/are, as the companies' boards meet and/or egm-s are precipitated (voting patterns by large financial institutions, including 'public' sector ones, and opinions expressed in public.)

At any rate, it's doubtful Tata Sons were or are unaware of the risks to good name and to share prices etc as the working-through of this CLEARLY 'political'=business-ideological-cum-battle-between-THE-threatened-promoter-group-and-their-largest-minority-shareholding-family conflict happens.
I still don't see any concrete action by Mistry that can be called unethical or wrong. Maybe Tata doesn't like Mistry's opinion of discontinuing with the Nano, or selling off the steel business in Europe/UK where it's running into huge losses, but that's only an opinion, not an objective assessment. You can't buy businesses based on sentiment and expect your good name to turn them around magically.

So far it looks like Tata is not happy with the decisions, which is fine. However when there is no shred of evidence of 'wrongdoing', the whole manner in which Mistry was ousted raises suspicions about the very intentions of Tata. The whole 'ethos' and 'values' discussion about Tata companies falls flat when you look at how Mistry has been ousted. And if media reports are anything to go by, Mistry seems to have been contributing to turning around IHCL as well as Tata Motors. Again, there is no evidence to refute this performance.



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Originally Posted by Swapnil4585 View Post
Why do they need to explain?

They entered into the contract in '09, the shareholders did not object, nor did the law prevailing at that time prohibited them to do so. Now the policy has changed. Why ask Tatas any questions? It's a policy flip flop.
Tata Sons/Tata have alleged mis-handling of the payment dispute with DoCoMo as one of the reasons for Mistry's ouster (or lack of trust with the Tata Sons board), so they MUST explain what exactly was wrong with Mistry's stand. The rules changed, policy changed, so Mistry said he cannot pay DoCoMo without RBI approval. To prove that he had the intention to pay, he has deposited the entire amount with the court. But he is still being accused of mis-handling the entire issue.

As you have rightly said, this has arisen out of a policy flip-flop, and I doubt if even Mr. Tata can do anything about it, unless he influences the RBI to either revise the policy or grant a one-time exemption in order to make the payment to DoCoMo.

So Tata must provide an alternative way that Mistry could have followed to resolve the dispute. One can't just make an allegation and not be expected to back it up with ideas and evidences of their own.
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Old 8th November 2016, 12:23   #189
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

For me this comes down to a simple difference in style of doing business.

Mistry is from the school of thought that says focus on all profitable businesses and discard the rest.

Ratan comes from the school of thought that says expand as much as possible and make the business group as a whole profitable, even if that is done through only one or two businesses being profitable like TCS and JLR.

Which way is right is a different issue. Capitalism says Mistry whereas Socialism says Ratan. I personally believe Ratan should have stayed away from micro managing the business after he retired. If he is micro-managing now he chose badly four years ago in his selection.

I had and always will have a great deal of love and respect for Ratan but I think he was 100% wrong in this case.
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Old 8th November 2016, 12:33   #190
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

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For me this comes down to a simple difference in style of doing business.

Mistry is from the school of thought that says focus on all profitable businesses and discard the rest.

Ratan comes from the school of thought that says expand as much as possible and make the business group as a whole profitable, even if that is done through only one or two businesses being profitable like TCS and JLR.

Which way is right is a different issue. Capitalism says Mistry whereas Socialism says Ratan. I personally believe Ratan should have stayed away from micro managing the business after he retired. If he is micro-managing now he chose badly four years ago in his selection.

I had and always will have a great deal of love and respect for Ratan but I think he was 100% wrong in this case.
Good summary.

A couple of points:
1. Seeing the profitability of the group as a whole is not being fair to outside shareholders that may hold shares in only the ones that are not profitable because others in the group are and can offset this situation where seen for the group as a whole.
2. What is right in one era may be inappropriate in another. What is right changes as the state of the group/companies and the economy evolves and changes. I think RNT has lost sight of this in trying to have the group hold on to his decisions. Life is a river, one cannot cross the same river twice.

PS: and to me the biggest irony is that RNT's much publicised advice to Mistry four years ago was: Be your own man.
Mistry took him at this word, big mistake?!

Last edited by Sawyer : 8th November 2016 at 12:43. Reason: PS
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Old 8th November 2016, 19:23   #191
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

Mr. Tata obviously has concerns of a 'political' nature, whether in the better or the worse senses of the term: there is plenty of evidence of what-he-probably interpreted as somewhat 'malafide' conduct on Mr. Mistry's part. i.e., that to some degree Mr. Mistry was seeking to de facto 'takeover' the Tata Group, which of course would require more than the post of Chairman but the all-too-glad 'cooperation' of 'outside powers', espcially large investors+party-political ones.

Frankly, if this sacking of Mr. Mistry has a year or two long history, and they'd spoken to him about this before the sacking 'shock', then his conduct during that time and very definitely since then (remember: he is part of a family that has as much as a 20% stake and more importantly one that has young and younger 'heirs', unlike the Tata-s) COULD indeed be interpreted as a betrayal of somewhat 'mala fide' motives and/or modus operandi.

My guess is that Mr. Mistry and family will have (tried to) set up the boards, the 'investors' (esp the 'public' sector ones!) etc in ways designed precisely for de facto total control IN THE STEAD of Tata Trusts. For which there would've been quid pro quo-s of course, evidently unacceptable ones to Ratan Tata/tata trusts. Let's witness voting and public support givings or not as the board meetings and/or egm-s happen for confirmation of this hypothesis.

It is a battle between THE principal (Tata Trusts) with their 'agent' (Mistry), just that the 'agent' is also a smaller 'principal' in his own right, and apparently playing/being-played by other, as i said, 'outside' 'powers', whether financial and/or most-likely: party poltical.

For reasons that were evidently seen by (Ratan) Tata Trusts as 'mala fide' (fide means 'trust'!) Including, perhaps, and there IS evidence of this, has been for a while now already: not plumping up dividends to Tata Trusts in many cases, failing to persuade/'manage' the government/'authorities' properly in the case of some 'deals' made or not-made/not-fulfilled etcetera.
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Old 8th November 2016, 19:56   #192
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

If Cyrus Mistry was so pained by the financial non-feasibility of the Nano, why didn't he allow the car to be sold as a Taxi ? Mistry was in office from 2012.

At the time, Nano was keenly looked onto by to replace the rick. This was followed by the Ola/Uber/TFS phenomenon, where people would've more than happy to pick up the Nano as a low investment Call Taxi of sorts. Aggregators like TFS even managed to get a few Nano's in 2014, but it wasn't sold to the masses as a commercial vehicle.

SO WHAT if it'd lose brand value, it was selling, what 5-6-700 units a month? Gah! Their installed production capacity was 20,000 units a month (single shift).

Why complain when he had powers to make the Nano project financially feasible & the car more accessible to the people to realise what an amazing piece of good Indian-engineering it is.
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Old 8th November 2016, 20:30   #193
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

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If Cyrus Mistry was so pained by the financial non-feasibility of the Nano, why didn't he allow the car to be sold as a Taxi ? Mistry was in office from 2012.
+1. During these 4 years, we even have the new & improved version.

That apart, the car may actually get a new lease of life if they change the body style and make it look different from the Nano - and showcase it as a nifty lil city car.
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Old 9th November 2016, 06:47   #194
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

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Originally Posted by desdemona View Post
... : there is plenty of evidence of what-he-probably interpreted as somewhat 'malafide' conduct on Mr. Mistry's part. i.e., that to some degree Mr. Mistry was seeking to de facto 'takeover' the Tata Group ...

My guess is that Mr. Mistry and family will have (tried to) set up the boards, the 'investors' (esp the 'public' sector ones!) etc in ways designed precisely for de facto total control IN THE STEAD of Tata Trusts. For which there would've been quid pro quo-s of course, evidently unacceptable ones to Ratan Tata/tata trusts. Let's witness voting and public support givings or not as the board meetings and/or egm-s happen for confirmation of this hypothesis.

It is a battle between THE principal (Tata Trusts) with their 'agent' (Mistry), just that the 'agent' is also a smaller 'principal' in his own right, and apparently playing/being-played by other, as i said, 'outside' 'powers', whether financial and/or most-likely: party poltical.

For reasons that were evidently seen by (Ratan) Tata Trusts as 'mala fide' (fide means 'trust'!) Including, perhaps, and there IS evidence of this, has been for a while now already: not plumping up dividends to Tata Trusts in many cases, failing to persuade/'manage' the government/'authorities' properly in the case of some 'deals' made or not-made/not-fulfilled etcetera.
Also so far there is not a shred of evidence to support your hypothesis. The shareholding pattern has not changed and Mistry was as answerable to Tata sons as he was to the other shareholders. So why should he treat Tata Sons or trusts as his 'principal'?

I hope we all understand that dividends can be paid only if a company is making profits. Out of so many companies in the Tata Group there may be a couple which are making profits. There have also been some reports where the Tata Sons board wanted Mistry to continue some loss making businesses by pumping money from other businesses into them. Highly dubious, and one will never find out if Tata Sons or Tata Trusts are also a vehicle to do that.

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Originally Posted by WorkingGuru View Post
If Cyrus Mistry was so pained by the financial non-feasibility of the Nano, why didn't he allow the car to be sold as a Taxi ? Mistry was in office from 2012.
...
Why complain when he had powers to make the Nano project financially feasible & the car more accessible to the people to realise what an amazing piece of good Indian-engineering it is.
Isn't there a minimum engine capacity required for a vehicle to be registered as a commercial people carrier? Also did Mistry actively prevent the Nano from being used as a cab?

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Originally Posted by condor View Post
+1. During these 4 years, we even have the new & improved version.

That apart, the car may actually get a new lease of life if they change the body style and make it look different from the Nano - and showcase it as a nifty lil city car.
Designing a new body shell would mean pumping more money.

Also with the Tiago and the Hexa shoring up the product lineup, can't the Nano finally be given the burial it needs? After all Mistry has some of the best people and tools to tell him if the project will ever break even. Surely they must have looked at every possible alternative to keep going before he concluded that there was NO way it would ever make a profit?
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Old 9th November 2016, 15:55   #195
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

Two very interesting developments of note:

1. Mistry's ouster was not on the agenda of the Oct 24th board meeting. Instead, the board had met to discuss a note on future governance which, when passed, would have granted freedom for operating companies under Tata Sons to take independent decisions, expedite the decision-making process, and spell out well-defined roles for all stakeholders in the group.

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The note had laid down the broad contours of the responsibilities of each board member, and even touched upon the chairman's role. It also defined the role of the trustee board members and the board of operating companies. The whole purpose of the note, according to a person closely involved in its drafting, was to take a call on when a decision should be escalated to the next level — the holding company, Tata Sons. It was prepared to sensitise board members and elicit their views before it could be further structured and given final shape.

If the note had found favour that day, it would have solved the current dual power structure in the group, as it had defined clear roles for every entity – be it the operating group, holding company and Tata Trusts, that hold over 67% in Tata Sons. Mistry was keen to empower operating companies so that they could take quicker decisions on matters which did not involve any financial burden on Tata Sons, said people aware of the matter.
ET


2. Mistry's Vision 2025 strategy, which he had presented to the board, aimed at doubling the company's market value in 10 years to $350 billion, besides targeting a growth of 10% annually. This would have given a tremendous boost to Tata's profits, and also increased dividends and profits to all it's shareholders.

Quote:
The strategy included restructuring loss-making businesses like Tata Steel's European unit; being less dependent on crown jewel Tata Consultancy Services (TCS) ; and piggy-backing on India's economic growth by investing in consumer-facing units, financial services and digital ventures.

The strategy was outlined to the Tata Sons board - and to family patriarch Ratan Tata - three times in 18 months, with the last presentation just months before Mistry's ouster, the people said. The strategy, one of the people said, was designed with the 150-year-old firm's investment principles in mind, with a focus on the long-term, entering pioneering industries, and holding a controlling stake in ventures. It aimed also to raise the return on capital employed to 15 percent, and more than double the dividend payout ratio to up to 25 percent by 2025.

ET
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