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Old 27th October 2016, 17:15   #106
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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 the_skyliner View Post
Lol. It takes two hands to clap and the clapping has now begun.
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Old 27th October 2016, 19:38   #107
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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 the_skyliner View Post
Here's Tata Sons responding to Mr. Mistry's letter to the board.
http://economictimes.indiatimes.com/...w/55093500.cms

The last statement is kind of funny:

The Tata way is to not run away from problems, or constantly complain about them, but firmly deal with them and build a better tomorrow.

What they mean to say exactly? That Cyrus was complaining constantly?! What a mess this is turning out to be.
The last statement will be rankling in Cyrus's mind now. I just hope that they don't continue the public spat any more. Whatever understanding that they have to come to, let it be through internal meetings.

Here is the same response in Tata.com website.

http://www.tata.com/company/releases...ons-october-27
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Old 27th October 2016, 20:34   #108
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

I've been watching this fiasco by Tata Sons board since Monday and can't help but feel that the Tata PR Machinery is out to sully the image of Cyrus Mistry. Let me summarize what has happened till now :

1. Ratan Tata wants to step down as Chairman of Tata Sons & Tata Group since age is catching up with him.

2. He makes a panel consisting of some people which includes a certain Cyrus Mistry.

3. Since the panel can't find anyone fit to lead Tata Group (really ? Of the 7 Billion People in the world, not a single soul to lead the High & Mighty Tata Group ? ) 2 members of the panel, Lord Bhattacharya & Mr. Ratan Tata himself ask, request, goad & beg Mr. Mistry to himself become the Chairman of the group himself.

4. Mr. Mistry, who is reluctant (guess why ? if the group is so holier than thou, he should jump at the opportunity) despite being 18.5% shareholder of Tata Sons and a non-executive director since 2006, finally agrees but wants free hand.

5. Mr. Tata agrees and retires from Tata Sons and instead focuses on investing in numerous start-ups.

6. Reeling under enormous debt and not so hot performance of all the group companies, bar 2, Mr. Mistry devises a plan to consolidate the Tata Empire, focus on Core Sectors, Exit from non-viable areas, divest non performing companies and instead focus on sunrise sectors where the chances of success are much higher than in the sunset sectors, where most of the Tata Companies are operating in.

7. Mr. Mistry is booted out from the Chairmanship of Tata Sons by the Single Largest Shareholder, namely Tata Trusts headed by Mr. Ratan Tata.

Now a few points about the booting of Mr. Mistry :

1. Tata Sons has not been able give a valid and viable reasoning for the sacking of Mr. Mistry. The most recent statement they have given reeks of arrogance.

2. The board of Tata Sons which voted 6-0 to sack Mr. Mistry, had 3 Directors appointed in August, 2016. It tool only 3 months for them to be dissatisfied with Mr. Mistry.

3. The only explanation that has been put forwarded is by some lone member of Tata Trusts who says Mr. Mistry wasn't listening to them and he didn't have the Ethos of Tata group. This statement in fact cements Mr. Mistry's charge that he was a Lame Duck Chairman and also confirms that Mr. Ratan Tata is not a rational thinker since he was the one who had cajoled Mr. Mistry to take up this job in the first place. Mr. Mistry had not applied to become the Chairman. Mr. Tata has known Mr. Mistry since a long time, so it can't be possible that he can duck under the "I didn't know he was like this" excuse.

4. This raises serious Corporate Governance issues inside the Tata Group. The trust members are dictating the board of Tata Sons what to do, who in turn are passing this information to respective boards of listed Tata Group companies in which Tata Sons is not the majority shareholder (except TCS where Tata Sons holds 70% shares). Are the Trust members competent enough to dictate the way the biggest conglomerate of India should function ? If yes, these Trusts should be converted into Companies so that they don't exercise the benefits associated with charitable trusts.

5. One of the reasons given for Mr. Mistry's ouster was the buying of DoCoMo's shares in Tata Teleservices. I don't know how it can be an issue (to the best of my knowledge, pls correct if wrong) since RBI itself has said that Tata Sons can't buy the stake from DoCoMo without violating FEMA. Infact it has filed an application to become a party in the DoCoMo vs Tata case in Delhi High Court in October 2016. How is this Mr. Mistry's fault ?

Now let's come to the accusations leveled by Mr. Mistry :

1. We all know how Tata Motors has been functioning. Mr. Mistry has brought to light what was suspecting in gossip circles. He alleged that there's no rationale to continue the Nano project and all the resources of Tata Motors were directed to Nano so they didn't have any resources to launch any new car.

2. He levels similar things in other companies like Indian Hotels, Tata Steel etc which are losing money since the decisions to acquire properties and companies were not logical but emotional and goes on to say that Tata Group may have to write down $18 billion if things are not changed soon.

I think Mr. Mistry was on the right path. He was consolidating the group so that it could digest the successful acquisitions, ampute the companies which are bleeding the group dry and focus on key areas to increase the profitability so that some years down the line the next phase of expansion (both organic and inorganic) can be commenced. Worldover successful companies work in alternative phases of expansion and consolidation. One without the other will lead to doom. I appreciate what Tatas have done for the society and country but they need to understand the most critical thing is that unless they are profitable, only then can they do charity work. A lot of problems faced by Mr. Mistry are the doing of Mr. Tata and to fire Mr. Mistry for the actions of his predecessor is simply wrong. The Tata Sons board has shown that it's not different than a Lala Company where the writ of the promoter runs. Mr. Ratan Tata has not covered himself in glory by backseat driving of the board and he finds himself in another soup after the Radia Tapes. The immediate problem Tatas have now is to find a successor to Mr. Mistry, given the circumstances and the treatment meted out to him it's going to be an uphill battle for Tata Group.

PS : Mr. Mistry is still using a Tata Safari despite being booted out.

Last edited by Eddy : 28th October 2016 at 08:48. Reason: Spacing for better readability
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Old 27th October 2016, 22:04   #109
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

Very well said, Turbo_Charger. Couldn't have said it better.

From what is there in the public domain at the moment, it appears Mr. Mistry was on the right ( but unpopular and realistic) track. He was doing what needed to be done. Sometimes doing what is right is what makes you unpopular. Shareholders should not expect dividends when companies are not making profits. Now, when you do not give them what they assume is their rightful due, it causes them to be disappointed.

Aviation, is like a fatal attraction. You know that you may bleed for a long time before you see any light at the end of the tunnel( Vijay Mallya should know), but somehow you are not able to use your better judgement to stay clear of it. Aviation brings you into the limelight( the Tatas were always in the limelight), but the costs may be very high for the same.

Tatas venture into the telecom space using the CDMA platform also did not work out well for them. ( Besides dragging them into the Nira Radia tapes and the associated scam along with it).

So, all in all, it does appear, at the moment that Mr. Cyrus Mistry was doing a good job but it did not go down well with the old guard.
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Old 28th October 2016, 00:13   #110
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

Mr.Mistry was perhaps failing to play the government/regulators/party-politics as well as intra-Tata-Group games (whether dirty or not) 'soundly' enough, both in India and in the Uk? OR too soundly, as the case maybe. :-)

Seems as much as anything as a clash of fundamental philosophies of management/entrepreneurialism/business: Mr. Mistry's more hard-nosed/desi/reactive/short-term/situational, the Ratan-Tata-era Tata Sons more entrepreneurial, more risk-seeking, more er 'visionary'/'aristocratic' (glory and longterm reputation in india and globally for HR/trust/brands and brand-building/philanthropy as much as profit etc?)

Why speculate i.e., gossip beyond this? Meanwhile, the longer this goes on in public, the more tempting many Tata Group shares are going to become for investors: imo sheer, utter good value now or soon (many of them, not all.) Of course, netas, political parties and their PR+media proxies etc will start jumping in too, if they are not operational already! "Muddying the waters", as usual. Still.
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Old 28th October 2016, 15:18   #111
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

In my opinion, only possible option left now is Natarajan Chandrasekaran.

Reason is other insiders (e.g. Noel Tata) were already explored earlier, and after all these points raised by Cyrus Mistry, It is very unlikely that any rumored outside candidate (e.g. Indra Nooyi) would take the risk, also "understand/follow values/culture" will always be an issue for any outsider.

Therefore I see very less probability of any "Vishal Sikka" i.e. Outsider who would be given complete freedom.
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Old 28th October 2016, 16:11   #112
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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 Vishal.R View Post
In my opinion, only possible option left now is Natarajan Chandrasekaran.
The big problem with this option is that for all the loud talk of professional succession planning in the group, there is no visible successor for him at TCS. Plus, his experience from beginning to end is TCS, so it is uni-dimensional for a job that has countless dimensions.

Big risk therefore of killing both the golden goose and the hand that needs its eggs to feed the many hungry mouths.
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Old 28th October 2016, 16:24   #113
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

What a mess. Like others have said, i agree that the Tata group have really messed this whole issue up. Even if every single allegation against Mr Mistry is true, there was a wholly better way of managing this.

Tata Sons might be a private company and they may not be legally obliged to provide an explanation on their actions, but the fact that they are one of India's largest groups and any issues at the group affects hundreds of thousands of lives (employees, stakeholders, families etc) and that they draw so much of their staying power courtesy of the image they project / carry, they owe the public a detailed explanation of their actions of the last week.

I don't really agree of either party using the media to wash their dirty linen. it would serve them better to sit across the table, agree on the terms of separation, explain their actions to the public (moral obligation more than anything else) and move on. There are too many livelihoods at stake that are needlessly affected by this mess. the faster it is resolved, the better it is for everyone.
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Old 28th October 2016, 16:38   #114
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Post Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

‘Unsubstantiated claims, malicious allegations’: Tatas hit back at Cyrus Mistry

http://www.hindustantimes.com/busine...blQLSP6EK.html

from the link above:

Mistry’s representatives did not respond to Tata Sons’ statement. The few lawyers who agreed to speak on the matter appeared to side with the Tata group.

“The only consequence I see,” said Hemant Sahai, who runs his own corporate law firm, “is a Sebi investigation into the allegations. “In my opinion there was nothing illegal in the removal of Cyrus Mistry. Probably, it could have been done in a different manner. But he has just been removed as chairman and not as a director. He continues to be on board of companies.”

Former additional solicitor general Biswajit Bhattacharya said Mistry should have expressed his concerns before his sacking, not after. “Corporate governance means all persons who are at the helm of a company are jointly responsible for the affairs and functioning of a company. Which makes Cyrus himself liable for all the allegations he made against the Tata Sons,” he added.

.
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Old 28th October 2016, 16:40   #115
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

Something else comes to mind - the group consists of 80-90 companies. What is wrong with giving each one a MD and a non executive Chairman+ Board of Directors for oversight, and letting them manage the show entirely? Subject of course to the pleasure of shareholders, which will include the public, public financial institutions and Tata entities? ( And actually, they already have all of this structure!).

Why is a group Chairman needed? Why is Tata Sons needed at all, other than as a legal entity to own some shares? Is it not possible that Tata Sons involvement in every company's management is leaving the companies slow to do what is right for them, and isn't the reliance on Tata Sons to do this in turn leaving them with mediocre top management?

Nothing novel about this approach - it is how companies work across the world, for a long time now.

And just as an example - the Nano. The correct thing for RNT, if he wanted in indulge in his passion for this, would have been to take direct executive responsibility for the project, personally responsible for its success or failure. Today, he is able to sit back and point out how it wasn't marketed correctly, and why it has failed. No one has asked him - Where were you at these times and why aren't you saying: I did not market it correctly, and here is how I am going to correct all that went wrong, and make it a success. Or, shut it down. All within this timeline.

This Tata Sons Chairman thing seems to be a lot like Sonia Gandhi.

PS: And Sonia Gandhi will never get an outsider to replace her; the PM position isn't that critical. Of course, that entire drama seems to be in its last act now.

Last edited by Sawyer : 28th October 2016 at 17:01. Reason: PS
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Old 28th October 2016, 17:51   #116
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

I think the Tata group companies are free to operate as they feel, within the group ethos. Industry with a Human(e) Face. Does Cryus forget the long association of Tata with aviation, Air India was JRDs baby? Ratan walking out with Nano from Bengal refusing to be blackmailed by Mamata! Now she is ruing since the land has become useless for farming. My own understanding is that all were against the Nano foray in WB, but Ratan dug his heels, our of social commitment.

Given the public image of Tata the Wall street philosophy of the next quarter does and will not work. Even with a 4% family holding no raider even thought about taking on the Tata. They knew the public outcry it will cause. By the looks of it Cyrus did not have the maturity to understand enormous size of the shoes he was stepping into.
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Old 28th October 2016, 18:19   #117
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

WHY shouldn't we should take Cyrus' letter with a fistful of salt ? He has sufficient motive to make the group look bad, as revenge. Cyrus had known this day might come, and probably pre-planned how he'd react. Else an angered & actually hurt person (with such resources) would first go and file a complaint & court case as soon as anything unfair happens.

That letter hides more than it discloses. Please re-read it & decipher why & how each subject has been touched.

Cyrus raised claims of some Mr.Siva's 200CR loan being written off, but he didn't clarify that the 600CR worth shares against that loan were forfeited.

Why raise the claims about Nano gliders, which is a petty item (in scheme of things). And the company from Norway obviously paid for them. How is it impropriety ? If Tata gets software made by TCS, would it be impropriety ?

Yes, the Tata Group had debts, but which company doesn't leverage capital ? As long as the Debts were repayable over a period of time, theres nothing wrong with debts.

I'd go as far to say that I have a hunch it very much can be a carefully drafted letter, designed just to touch topics that'd make Ratan Tata & the group look bad, put out (not that it leaked) as a pre-meditated & calculated reaction after Cyrus being fired, just for vengeful collateral damage. IMO This letter was a blow to negotiate for a high exit price for his 18%.

Seeing how craftily Cyrus' letter was drafted, it could be that he actually conducted himself as a rather nasty person while interacting with the other Group board members. Maybe they're just too shy to admit that they were being dismissively walked over all the time by Cyrus, hence the constant "Cyrus not aligned to TATA values" argument. If it was conspired, they'd have designed a compelling narrative to reason out the dismissal.

Quote:
Originally Posted by the_skyliner View Post
...The last statement is kind of funny:

The Tata way is to not run away from problems, or constantly complain about them, but firmly deal with them and build a better tomorrow...
Tata Motors wasn't doing well for over 6-8 years right? Guess how many workers they laid off at the manufacturing plants ? Zilch. Zero.

5 years back, it would have been easy to dismissively think that since Tata PV cars was doing very poorly, they should close it down and concentrate only on the commercial vehicles segment. But Ratan Tata appointed Karl Slym to turn Tata Motors around, and turn around they did.

They didn't employ a money managing CFO, they'd appointed a chairman in Cyrus Mistry. And maybe thats why the sale of Corus Steel (leading to unemployment) really did not augur well with the Tata.

Quote:
Originally Posted by Sawyer View Post
It takes two hands to clap and the clapping has now begun.
Maybe they're just doing a bad job at reacting naturally at Cyrus' letter. I wish they just keep quiet. Brazen it out. WHO has the guts to force them to answer ? They needn't clarify their position, and they'd still get all the funding they'd want from the sources who trust them. Many do. Almost too many.

Its not that Ratan Tata indirectly wanted to hijack Shaporji Pallonji's money, hes' getting offers to buy out Cyrus' 18% shares and hes' going to pay it back & have Cyrus leave Tata Group for good.

If I'm wrong, no loss, but if I'm right, this could very well be an 80 year old coming back to save his family's legacy. Non-Constructive Public criticism might not be what he's looking for.

Maybe cut the grand old man of Corporate India some slack guys.
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Old 28th October 2016, 18:20   #118
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

To give my two cents, most businesses in india are commercial operations hiding under the cloak of a Non profit parent for tax purposes and engage in CSR solely for the purpose of image. On the other hand, tata seems to be more of a large non profit which by happens to be running a bunch of business which seem to have become very large and profitable. In such a situation, if you're an outsider, it is easy to get confused and lose sight of what you are, think of yourself as a business and you might end up stepping on some holy cows. Imagine if pathanjali fired half their indian workforce, moved their production to china in the quest for profitability, and hired a bunch of random celebrities to endorse their products to drive growth?

I remember when i was working in a semi official capacity for our B school which was run by a non profit. Our institute was falling behind compared to a lot of the other commercial b schools where the management used to get directly involved in placements, promotion etc, while our management was more interested in using the MBA programme as a cash cow for funding their research, social programs, charities etc, and could not in the least be bothered about trying to help us improve our positioning and try to close the gaps with our competitor b schools. For them, their aim was not to make money - not in the long or the short term. What they wanted to do was help people, and that was what mattered.

Mr Mistry refers at multiple points to his efforts at driving profitability and growth, efforts that bore results often with social costs. In an organization that may be closer to a charity than a business than he thought. A mistake that is entirely justifiable when you look at the fact that he comes wearing the shoes of a stakeholder, and looks at things through the lens of ROI, rather than trying to maximise value for society.

Last edited by greenhorn : 28th October 2016 at 18:39.
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Old 28th October 2016, 18:29   #119
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

I see the Tata Group facing the following problems with no solution in sight.

Short Term :

1. Finding the successor to Cyrus Mistry. With the treatment meted out to a person who owns 18.5 % shares, comes from one of the richest families of India, no professional worth his salt would throw his hat in the ring. Please remember that if the Tatas could not find a successor to Mr. Ratan Tata & had to ask Mr. Mistry to step in, his unceremoniously sacking & all the talk about Tata values & ethos would further discourage any qualified professional from taking this crown of thorns.

2. Reassuring the banks, government & investors that it's Business as Usual in Tata Group. With this saga the perception of Tatas has taken a beating in the minds of public. Tatas have showed they are not above board than other scheming corporates & boardroom battles are fought regularly. Tatas need to define if they are a promoter backed professional led company or a promoter backed promoter led company. They need to first acknowledge the problem, give answers & then work to rectify it. Not giving answers to investors while hiding behind the cloak of secrecy is simply not acceptable in this time & age.

Medium Term :

1. Planning for life after Ratan Tata. I wish Mr. Tata many healthy years ahead but it's a fact that he is in the advanced stage of his life. After finding the successor of Mr. Mistry, Tata Group should find a successor of Ratan Tata. He will leave behind some very large shoes to fill. Noel Tata is reluctant to expand his role in Tata Group & he is also the brother in law of Cyrus Mistry. If not him then who ? Also the way the Tata trusts are asserting themselves in Tata Sons, who knows if someone with malicious motive takes control of the trusts & gets control of the group too. We have seen such tactics before too.

2. Clear the public perception. The Tatas need to rebuild the perception built in the minds of public & investors that they too are like regular corporates. They need to have new rules, become more transparent and stop dictating to the board. Mr. Mistry has alleged that sometimes the board would wait for hours so that the directors could take instructions from Mr. Ratan Tata. Such things should have never happened in the first place. If you've given up on something, don't do backseat driving.

Long Term :

1. Consolidate the Tata Group. Tata have so many companies that there's no clear strategy or vision for them. Often the companies are competing with each other. Companies working in same field have no coordination thereby increasing costs. Such things should have never happened in the first place. The group needs to be restructured so that there are clear verticals that the group operates in. No conglomerate can function if the left hand doesn't know what the right hand is upto. Profitability should be increased or the group will cease to exist. Only 2 companies Jaguar Land Rover & TCS provide 130% profit of the group. Take these 2 out and you are left with a group which is saddled with losses. This will lead to a vicious cycle which is very difficult to break.

2. Change the philosophy of Tata Group. The first thing that strikes me when someone says Tata Group is Kumbh karan. Why is it that when the leading companies world over want to be as nimble as possible, the Tata way of working puts even the sarkari babus to shame. When even the government of the country wants to be as swift & efficient as possible, Tatas seem to have missed the bus. They are still content in living like a dinosaur of the license quota raj. Times have changed. There's extreme competition everywhere. Why is that Tata companies are always lagging behind their peers ? Just take a look at Tata Motors. In the amount of time it took them to modify Aria as Hexa & launch in the market, their peers have already launched several models. Maruti has launched S Cross, Baleno, Vitara Brezza & will launch Ignis in January with the Hexa. Even Mahindra is way faster than Tata Motors. They have adequate talent but can't utilize it. Unless the work culture changes Tatas won't survive in the future with this mentality. Instead of embracing this the Tatas are still stuck in history & have always refused to adapt. Change is the only constant & unless they change completely in the long run, there might not be a Tata Group left in the future and that will be a shame.

PS : Some of you have said that Tata Group should not worry for profits since they donate money to charity. I think they have an added social & moral responsibility about profitability since the more profits they earn the more charity they can do. If there are no profits from where will they do the charity ? This was 1 of the main points raised by Tata trusts that the amount of money available to them is decreasing since the companies are in losses & can't declare dividends. In addition if profitability is not their goal they should openly mention this as a disclaimer when they list companies on the stock market & should tell it clearly to the investor & lenders.

Last edited by Turbo_Charger : 28th October 2016 at 18:55. Reason: Added some lines at the end.
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Old 28th October 2016, 18:31   #120
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Default Re: Ratan Tata makes a comeback as Chairman of Tata; Cyrus Mistry out

Quote:
Originally Posted by greenhorn View Post
Mr Mistry refers at multiple points to his efforts at driving profitability and growth. In an organization that may be closer to a charity than a business than he thought.
The charity is from the Tata Trusts, not the rest of the organisation. And their voiced on TV complaint against Mistry is that he wasn't delivering enough profits and dividends to them, which was reducing the charity they could do. Other issues apart, in saying this, they are very correct. It is the job of the business, and Mistry was right in driving this - to maximise dividends via profitable growth - the business cannot be distracted by the charity thing. It is the job of the Trusts in this case, to do what they please with the dividend returns; in this instance, charity. If the companies are allowed to say that we will deliver lower returns because we are a charitable group, it will all go downhill rapidly.
PS: Indeed, listening to the TV interview by the trustee, I was left thinking - is he speaking for or against Mistry?!

Last edited by Sawyer : 28th October 2016 at 18:35. Reason: PS
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