Tata Sons' decision to replace Cyrus Mistry with Ratan Tata as the group's chairman has taken the corporate world by storm.

Mistry, who was appointed as Chairman of Tata Sons in December 2012 on the basis of his representation from Shapoorji Palonji, the largest shareholder in Tata Sons, was sacked in an unanticipated move at a board meeting held in Mumbai.

Cyrus Mistry/ Source:PTI

He has been replaced by Ratan Tata, who will be the interim chairman for four months. Here are the probable reasons for Tata Sons' sudden move:

  • According to CNBC-TV sources, Cyrus Mistry's sacking was performance-based. The channel cited "larger interest of the group for Tata Sons' removing Cyrus Mistry as the chairman of the company".
  • As per PTI reports, there were no reasons given for the change of leadership of the man who was brought in with much fanfare. But it is believed that Tata Sons was unhappy with Mistry's approach of shedding non-profit businesses, including the conglomerate's steel business in Europe, and concentrating only on cash cows.
Ratan Tata/Source:PTI

  • A Business Standard report said that Mistry had reportedly promised two new launches for Tata Motors every year but the company's recent launches, Zica (later named Tiago) and Bolt, failed to make an impact on the domestic market. This was coupled with fears that Tata Motor's UK facilities, which produce Jaguar and Land Rover, were losing jobs after Britain's exit from EU.
  • The report also suggests that the management believed that Mistry couldn't helm the company through tough times and the company as a whole never challenged itself under his guidance. The company's domestic and international operations were hit in many sectors, including commodities and chemicals, under Mistry.
  • Some experts also suggest that a legal battle with Japan's NTT DoCoMo could be one of the main reasons for ousting Cyrus Mistry, reports Financial Express.
(Feature image source: Twitter/@thewire)