Business

How Cyrus Mistry was fired as Tata Chairman?

22 Oct 2017 | By NewsBytes Desk

On October 24, 2016, former Tata Sons chairman Cyrus Mistry was suddenly removed from his position. It was the first time Tata Sons had publicly removed a chairman.

Three members of the Misty-appointed Group Executive Council were sacked: Nirmalya Kumar, NS Rajan and Madhu Kannan, all three recruited from outside the group.

Almost a year later, Nirmalya recollects the day's events in his blog.

In context: The events leading to Cyrus Mistry's sacking

22 Oct 2017How Cyrus Mistry was fired as Tata Chairman?

Pre-meetingAn unscheduled informal meeting of board members

Mistry was in his Bombay House office preparing for a board meeting at 2pm. There had been an unscheduled meeting of some board members earlier.

Right before the 2pm meet, his predecessor Ratan Tata and board member Nitin Nohria walked in and told him they are going to let him go.

He could either resign or face a resolution.

Mistry calmly chose the latter.

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Mistry's arguments calling the move "illegal" were dismissed

MeetingMistry's arguments calling the move "illegal" were dismissed

When the board had met and the matter raised, Mistry argued it's illegal: a 15-day notice period was mandatory before taking up such items for consideration.

His objection was overruled.

Members then voted on his removal: Farida Khambata and Ishaat Hussain abstained, while Ajay Piramal, Amit Chandra, Nitin Nohria, Ronen Sen, Venu Srinivasan and Vijay Singh supported it.

Mistry was voted out in minutes.

Post-meetingTata had booked top PR, law firms to corner Mistry

At 3pm, Mistry was back in his office. He called Apurva Diwanji, friend and lawyer. Apurva arrived in ten minutes.

They needed a place to escape the press. Jai Mavani from Shapoorji Pallonji, Mustry's family firm, arranged a temporary stay at the Forbes headquarters in the neighborhood.

They also needed lawyers and PR personnel, but soon realized Tata had already booked the top firms.

A statement from Tata Sons came at 7pm

"Tata Sons today announced that its Board has replaced Mr. Cyrus P. Mistry as Chairman of Tata Sons. The Board has named Mr. Ratan Tata as Interim Chairman. The Board has constituted a Selection Committee to choose a new Chairman…in four months."

ElsewhereThree outsider GEC members had been let go too

Oblivious to the ongoings, Nirmalya, Harish Bhat and NS Rajan were at Taj Hotel President for a question-answer session with young executives.

They found out during the session. Rajan and Kumar heard they had been let go too.

They moved to Kumar's and then to Ishaan Hussain's house for drinks. At 9pm, Kumar received a call saying his services weren't required any longer.

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Drama'No reason to fire Mistry'

Nirmalya notes that what made Mistry's sacking "so unusual" was that the Tata Group had had a history of just six chairmen in 148 years.

Mistry had been chosen after a careful screening process that took over a year.

His initial contract was anyway supposed to end in March'17. Instead of unleashing a public drama months ago, they could have "just let the clock run out".

AftermathNow Mistry is waging a battle against Tata Sons

"It was the start of a furious two months," writes Nirmalya, adding, "I worked harder than ever with Madhu to help Cyrus wage a battle against the enormously powerful Tata machine."

"A year later…only two Tata CEOs, Bhaskar Bhat and Harish Bhat, have had anything negative to say about Cyrus Mistry in the press."

"What better performance review could Mistry have received?"