A surgical strike at Tata Group leaves India agape

For all the hype over India’s attacks on terrorist bases across the border in Pakistan, none would have imagined a “surgical strike” – as the commando action has come to be known – with such clinical precision right at the heart of India’s business community.

After four years at the helm of India’s fabled conglomerate Tata Group, chairman Cyrus Mistry – the first chairman from outside the Tata family – was abruptly fired by his own board last week. His temporary replacement is his predecessor Ratan Tata, who is now chairman of the Tata and Allied Trusts, which owns 66 per cent of Tata Sons. Ratan Tata, one of the most famous Indian business leaders ever, is widely believed to be behind the decision to remove Mistry and some of his key advisers from their posts.

Tata Group is a US$100 billion company, with significant global investments. In fact the majority of its income now comes from outside India. Founded in 1868, Tata has diversified with more than 100 constituent companies engaged in everything from steel, chemicals and automotives to IT consulting, beverages and telecoms.

As well as Europe and Africa, the conglomerate has major investments in China and employs more than 3,500 people there. Tata Consultancy Services (TCS), Tata Steel and Jaguar Land Rover are all major employers in China, which is also a major export market for many of the firm’s products. Ten companies in the Tata group have offices or investments in China.

So why so much excitement about the sacking of Mistry? The headline ‘Board Fires Executives’ is, after all, hardly unique. Few days pass without a board somewhere in the world asserting its authority and demanding the removal of executives in whom it has lost confidence. Indeed, long-serving board member Gerry Brown, in his book The Independent Director, said replacing outdated executives with people capable of taking on future challenges is one of the functions of a board.