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Tata Sons could have followed proper process if they wanted to fire Cyrus: Nirmalya Kumar

Thomas K Thomas Mumbai | Updated on January 27, 2018 Published on November 21, 2016

NIRMALYA KUMAR, Former member of Tatas’ Group Executive Council



Ever since the boardroom battle between the Tata Group and Cyrus Mistry came on to the public domain, there have been allegations and counter-allegations by the two sides on issues related to performance, corporate governance and Ratan Tata’s interference. One of the casualties of this war is marketing guru Nirmalya Kumar who, like Mistry, was unceremoniously fired from the Group Executive Council (GEC) of Tata Sons. Kumar blogged that he was fired for working with Mistry. In a conversation with BusinessLine, he spoke about how he has put his sacking behind him and how he sees the dispute playing out. Excerpts:

In your blog post you wrote the news of your firing was sudden. But did you get a sense earlier that things between Mistry and the Tata Group were not all okay?

Cyrus is like any boss. If I have problems with my boss I am not going to communicate that down the line because it makes those people feel insecure. So maybe there were problems between Cyrus and Tata, or not — I did not know about them. At the GEC it was business as usual.

Where did things go wrong for you?

I don’t know. When I was fired I wasn’t even given an explanation. You are asking me to explain the action of someone (Ratan Tata) who I have met for not more than 10 minutes in my life.

Do you feel let down?

No. Life goes on. It doesn’t make any difference if they gave me an explanation — I would have been fired anyway. Was the process followed in firing me? The answer is no. But I am not thinking about it. I am thinking about what’s next. I was privileged to have got this opportunity with Tatas. Even if I knew the same outcome three years ago, I would do it again.

Tata Sons has explained that Mistry’s ouster was due to poor performance and lack of strategy. At the GEC, you were responsible for strategy. Can you explain what you brought to the table?

Our focus was on what this group should look like in 2025 and how should we get there. Once we decided that our goal was is to be the among the top 25 in the world in terms of market cap; then we knew our goal should be to reach $350 billion in market cap at that stage.

This means a growth of 10 per cent per annum between now and then. We had detailed plans on this.

The 2025 strategy document seems to have now been scrapped, which suggests that the promoter group was not in line with the vision. Was this plan discussed with all stakeholders?

This was the joint understanding between Cyrus, in consultation with me and the board of directors of Tata Sons.

Why has Mistry blamed legacy issues for alleged poor performance? What did he do about problem areas like telecom and steel?

Cyrus has never pointed to legacy. We are here to fix the problems. He was fixated on solving five hotspots. On Tata Tele, for example, the EBITDA margins between 2012 to 2015 went from ₹500 crore to ₹2,500 crore through a lot of restructuring of business. That’s a five-time growth. These are still not out of the woods.

These are long-term problems but Cyrus was working on it. You also have to give credit to the CEOs of these companies.

So you reckon the assessment by Tata Sons about Mistry’s poor performance is unfair?

No one has made this assessment to us. No one in Tata Sons has told us. Please ask them to give you the last evaluation done by the Tata Sons board. Then you will know whether they thought he was doing something or not doing anything. Why are they not putting it in public domain? He had excellent performance reviews. Mistry put in place a framework which required him to be evaluated by all board members every year. Not only by Tata Sons but by all other boards on which he served. This means he has 50-60 evaluations on him being done every year. Did the Tata Sons directors and independent directors check any of these reports? How many independent directors of group companies did they talk to to get a sense of Cyrus’ performance before a big decision was made to oust him?

Was GEC disbanded because it was merging as this super authority undermining the boards of various companies?

Not true. The GEC’s role was to make centres of excellence without any operating responsibilities. My job was to help Cyrus with the strategy of Tata Sons. I never went to any company asking for their strategy. People approached me for feedback. For example, Noel Tata came to me and asked me spend time with Janaki (strategy head at Tata International) and give feedback. It wasn’t as if I went to Noel and said I want to see Tata International strategy. Harish Bhat also came to me several times asking if I could spend time with the Tata Global strategy team.

Clearly, the former members of GEC have aligned themselves with one side or the other. Was there any friction in GEC before this dispute ?

GEC functioned really well. We had a fantastic group of people. Your observation about GEC members being sacked is based on whether they were hired before Mistry or after Mistry. It’s got nothing to do with how the GEC functioned.

What is Mistry’s plan from here on? Can the Tata Group bounce back from this?

I hope so. Mistry’s motivation is the same now as it was before. The Tata Group is not owned by any one individual. It belongs to India. Brand India and the Tata image are linked forever. We want to have the highest standards of corporate governance. We want to have ‘Swachh Tata’ just like we have ‘Swachh Bharat’. That’s why we were trying to get rid of people who had a dubious kind of relationship with the Tata Group. Cyrus was very clear — let them tender; if they are the best and most cost-effective they get the job. But no one is getting money for just hanging around. He was very particular about ethical violations. Even today he is fighting for that. If we can get the highest levels of corporate governance then Tata Group will win.

Why was Mistry silent all this while? It’s only now he is raising these issues.

All these issues were discussed in the Tata Sons board. Check the board minutes.

Mistry has said in his note to Tata Sons board that he felt like a lame duck Chairman. Did you get a sense that he was not in control?

No, I did not get any such sense but I did get a sense that there were a lot of meetings taking place between Cyrus and Ratan Tata.

There must have been 15-20 meetings in the last two years of three-four hours each.

I had to prepare documents for these meetings. So I felt a lot of Cyrus’ time was being spent on making these presentations to Ratan Tata. I didn’t question it then but in hindsight it was an indication.

Any regrets in the manner this has played out in public?

They could have followed a proper process if they wanted to fire Cyrus. If I wanted to fire someone, Cyrus would ask me if I hired him in the first place and, if I did, what did I do wrong while hiring him.

So you have to take some responsibility as well. Cyrus’ contract was getting over in April so they could have told him that it was not working out.

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Published on November 21, 2016
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