TATA SONS vs CYRUS MISTRY
The prolonged fall-out had finally been exposed when Cryus Mistry, the chairman of Tata Sons was fired on 24th October, 2016. This shook the corporates and markets as Tata Group, a corporate giant, has never indulged in such unceremonious firing of a top executive.
Let's first look at why this happened and then why this three year old news is still relevant.
WHY WAS HE OUSTED?
• Looks like Mistry had violated the very principle of Henri Fayol, "Subordination of individual interest to the general interest." Mistry is the chairman of Tata Sons. During his period, there were many deals between Shapoorji Pallonji & Co and Tata Sons. Ah wait. Let me tell you his full name. Cyrus PALLONJI Mistry. This eventually raises the question about which company Mistry was actually working for.
• Tata Group was managed by the Tatas themselves for ages. They had their own way of running the business. But Mistry from Pallonji family indeed had a 'pallonj-ish' style of getting things done. Tatas were not comfortable with this.
• Tata trusts holds around 66% of shares while Pallonji family holds 18.4% stake. Major decisions are to be taken only after discussing with the key shareholders. But Mistry acquired Welspun solar farms for $1.4 billion without their consultation. Also, the Tatas were unaware of many other decisions taken by Mistry.
All these heated up Tata Sons to the level of firing.
Mistry filed cases against Tata Sons in the National Comapny Law Appellate Tribunal(NCLT) alleging oppression of minority shareholders, poor corporate governance and lack of transparency.
On 18th december, 2019, the NCLT reinstated Cyrus Mistry's position and declared that Tata's moves were illegal.
Also, Ratan Tata has taken this to the Supreme court challenging the NCLT's order.
Mistry got back his power. Sounds like the end right?
Then comes this news.
"Not interested in returning as Tata chief", says Mistry. He denies the position saying that he was fighting not just for himself but the interests of the minority shareholders as a whole.
In a nutshell, the difference of opinions, inability to come to a decision accepted by all has provoked these problems.
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Let's first look at why this happened and then why this three year old news is still relevant.
WHY WAS HE OUSTED?
• Looks like Mistry had violated the very principle of Henri Fayol, "Subordination of individual interest to the general interest." Mistry is the chairman of Tata Sons. During his period, there were many deals between Shapoorji Pallonji & Co and Tata Sons. Ah wait. Let me tell you his full name. Cyrus PALLONJI Mistry. This eventually raises the question about which company Mistry was actually working for.
• Tata Group was managed by the Tatas themselves for ages. They had their own way of running the business. But Mistry from Pallonji family indeed had a 'pallonj-ish' style of getting things done. Tatas were not comfortable with this.
• Tata trusts holds around 66% of shares while Pallonji family holds 18.4% stake. Major decisions are to be taken only after discussing with the key shareholders. But Mistry acquired Welspun solar farms for $1.4 billion without their consultation. Also, the Tatas were unaware of many other decisions taken by Mistry.
All these heated up Tata Sons to the level of firing.
Mistry filed cases against Tata Sons in the National Comapny Law Appellate Tribunal(NCLT) alleging oppression of minority shareholders, poor corporate governance and lack of transparency.
On 18th december, 2019, the NCLT reinstated Cyrus Mistry's position and declared that Tata's moves were illegal.
Also, Ratan Tata has taken this to the Supreme court challenging the NCLT's order.
Mistry got back his power. Sounds like the end right?
Then comes this news.
"Not interested in returning as Tata chief", says Mistry. He denies the position saying that he was fighting not just for himself but the interests of the minority shareholders as a whole.
In a nutshell, the difference of opinions, inability to come to a decision accepted by all has provoked these problems.
If you like reading Newsbytes, do share and subscribe!
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