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For some it is a welcome move and for some others it is a case of a selector becoming the selected (as in, Mr Mistry the new Deputy Chairman of Tata Sons, is part of the Shapoorji Pallonji Group the largest Tata Sons shareholder with the largest say in the appointment).
Dalal Street responded to the appointment of Mr Cyrus Mistry as the future Chairman of Tata Sons exuding emotions ranging from the confident, to neutral to even negative.
“It is good that the uncertainty about succession has been resolved,” said Mr Arun Kejriwal, Founder, KRIS Research. “The fact that somebody who is not managing a company of the Tata Group has been brought in at this position is a strategic decision.” The non-controversial image of Mr Mistry would take care of the group's growth going forward, said some. “The Tata Group is an institution in itself with well laid out strategy, systems and processes,” said Mr Sandeep Singhal, Co-Head Institutional Equities, Emkay Global. “The challenge for the new incumbent is to keep the group on the growth path which will happen as he is competent and will bring new energy.”
“The Tata Sons board are in the best position to evaluate the credentials of the person who should succeed Mr Ratan Tata,” said a fund manager of an Indian Mutual Fund house. “Similar noises were raised when he had succeeded JRD Tata in the 1990s.”
On the question of the impact of this appointment on the Tata group stocks, analysts said that it would not be very significant.
“Anyway the sentiment in the market is negative and this affects the Tata Group stocks also,” said a dealer from an Indian brokerage.
Some felt the Tata Sons board could have been forced to make this choice. “The fact that the Tata name would not be around anymore to steer Tata Sons could make a huge difference to the group's credibility, given the culture of equity, meritocracy and fair play that they are known for,” said the Chairman of an investment advisory firm that advises foreign funds.
“This could have a short-term negative impact on the group's stocks as the new incumbent would have to work really hard to keep up the group's existing reputation and prove a worthy successor,” he said.
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