Tata but no bye-bye

The unexpected dismissal of Cyrus Mistry as chairman of Tata Sons has cast the spotlight on Bombay House for the wrong reason. The board of directors voted out Mistry quietly, and brought back Ratan Tata as an interim replacement. The official reason for dismissing Mistry is non-performance and this makes the case really curious. 

Going by Mistry’s reaction, the board does not seem to have followed the process of natural justice, which is to ensure that you give the person a chance to explain/defend himself. A key reason cited for things to come to pass the way it has, is the breakdown of communication between Mistry and Tata. If he indeed had a free rein since he took charge, would it have been fair to expect Mistry to consult Tata on an ongoing basis?

In fact, good governance demands that the chairman report only to the board of directors and to no one else, including the principal shareholder. Unfortunately, in a world where governance is what suits the principal shareholders, it comes across as unusual when the chieftain goes about his work independently and is not necessarily aligned with the former.

Given the myriad companies and the complicated nature of businesses under Tata Sons, were there parameters other than what meets the eye that led to the ouster? If that is the case, the communication issued by Tata Sons so far does not say anything in this regard. 

The board did have the option of nominating one of the directors as the interim chairman, if at all they felt the need. But then, in the absence of fraud, what was the urgency to oust Mistry in the manner they did? This, and more, is the focus of this issue’s cover story. The House of Tata has always been known for its high standards but in this case, there are more questions than answers.

Among other stories in this issue is the growth challenge faced by IT services’ poster boy — Cognizant. The software major has been slow to transition and now an activist investor is putting pressure on the management to deliver.