Was Cyrus Mistry eased out because he lacked vision?

He was everything that the Tata Group was perhaps not known for.

When formal dressing was the hallmark of the Tata Group, Cyrus Mistry always had his sleeves rolled up, with his coat and tie lying in the office.

While the Tata Group always worked on a vision (Ratan Tata’s was that every group business should be among the top three in the industry or exit), Mistry always focussed on just two metrics — net profit and return on capital employed (ROCE).

And though the exits of all past chairmen had been preceded by a careful strategy to find a successor, Mistry has been shown the door in a jiffy without anyone to replace him yet.

His father Shapoorji Pallonji is the largest shareholder in Tata Sons with an 18.5 per cent stake.

“The board had been contemplating his (Cyrus Mistry’s) replacement for about four-five months now,” a group insider told BusinessLine.

The reason for Mistry’s unceremonious exit may be linked to performance; but to be fair, Group companies did well in the markets under his tenure.

The market capitalisation of 24 Tata Group companies increased 49 per cent in three years beginning December 28, 2012, when he took over.

“Its not just about financial performance. All the businesses of a group this size are not going to do well all the time. The expectation from Mistry was that he would provide some strategic direction like Mr (Ratan) Tata did when he took over,” said the insider.

It appears Mistry didn’t do that. Rather, he has been slow in taking some calls, like deciding on a successor after Tata Motors MD Karl Slym’s death. He took almost two years, a record of sorts for an auto major, to appoint Guenter Butschek. Mistry himself, meanwhile, looked after the business.

In the four years since he took over, nothing much has changed at group companies either: Tata Consultancy Services (TCS) continues to be the group’s rock star performer (moving up and down with sectoral and global sentiments); Tata Teleservices’ woes have become bigger, with an ongoing dispute with Japanese partner NTT DoCoMo. As for Tata Motors, Jaguar Land Rover continues to be the only silver lining.

“A group of this scale and size needs to introspect — on where it will stand in the next 20 years; which businesses it will continue to be in and so on. They need a global visionary, who can set the vision for the next one or two decades,” said another executive.

Clearly, Mistry’s exit is not even half as dramatic as his entry was to India’s largest multinational conglomerate. Ratan Tata and his handpicked advisors took a couple of years to zero in on Mistry as the Chairman.

This time, the board wants to find his successor in four months. It wont be an easy task, for sure.