BENGALURU: Cyrus Mistry fired!’ exclaimed the India.com headline on 24 October 2016. Calling the move ‘extremely unexpected’ and its impact ‘shocking’, the article announced the seemingly sudden ouster of the chairman of Tata Sons. No Indian company is more iconic than Tata, the nation’s largest conglomerate, founded in 1868 by one of India’s national heroes, Jamsetji Tata. Composed of more than 130 separate firms, Tata has long been a source of tremendous pride for India. What made the news of the shake-up at the top more disturbing was that there was little public sign of trouble before that fateful day in October.
There was no public scandal, no publicized act of gross mismanagement, no instance of ‘proven corruption’ prior to the ‘sacking’ of the Tata Group chairman. As NDTV put it, the event came ‘without any prior warning or signal’. Amid ‘shock waves both at home and abroad’, NDTV asked: ‘What triggered . . . the removal of Mr Mistry?’ Chairmen and CEOs get fired all the time, but in India, 24 October 2016 will be remembered as one of the most significant in the history of business-certainly the most significant in India. That was the day that Cyrus Mistry was asked to step aside as the chairman of Tata Sons, the role he had only held for four years.
Since its founding in 1868, there had only been five previous chairmen of Tata Sons. None had ever been fired. Three had died in office, and the other two, J.R.D. Tata and Ratan Tata, were eighty-six and seventy-five, respectively, when they retired, so it certainly came as a shock to some in the business community when Mistry was relieved of his responsibilities at the relatively young age of fifty.
In the short time since Mistry was relieved of control, books have been written and many-thousand words committed to print, all presenting different versions of the events that led up to his firing. Some are more accurate than others. The net net, however, is that when an organization’s board of directors loses confidence in its chairman and/or CEO, it is always time for a separation. That said, there was no one factor that caused the board to lose confidence in Mistry’s leadership.
There were many issues-some small, others large, all significant-that, taken together, forced the board to act. To fully understand how the events of Mistry’s rise, tenure as chairman and dismissal unfolded, you have to understand the dynamics and complexities of how businesses at the highest levels in India operate. This book is an attempt to give the reader a more comprehensive picture of all of the events, all the forces leading up to that momentous event. It explains, as factually and objectively as possible, the backgrounds of the key players and organizations.
To appreciate the significance of the removal of Cyrus Mistry from the most influential position in business, we must understand how the House of Tata came to exist in the first place. This requires comprehending the dynamics and the intricate relationships that existed between several family dynasties-the Tatas, the Dinshaws, the Wadias and the Mistrys.
The Mistry and Tata families became inextricably intertwined in 1936, when Cyrus Mistry’s grandfather, Shapoorji Pallonji Mistry, ‘Go on Doing My Work and Increasing It’ bought 17.5 per cent of Tata Sons, the Tata principal holding company.
Shapoorji’s father, Pallonji, was a builder. He was industrious but not yet wealthy in the 1860s, when Nusserwanji Tata and Dadabhoy Tata (his cousin and brother-in-law) were embarking on trade with China. The Tatas soon became prosperous, in contrast to the Mistrys of that time. It was only after Shapoorji founded Shapoorji Pallonji & Co. and progressed from being a journeyman builder to an increasingly high-powered contractor, building homes for Bombay’s elite, that his fortune began to change. Among the wealthiest clients of Shapoorji Pallonji & Co. was Framroze Edulji Dinshaw, a prominent attorney, landowner and financier.
(Excerpt with the permission from The Story of TATA: 1868 to 2021 by Peter Casey published by Penguin Random House India)