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Rediff.com  » Business » 'Mistry arrested the downfall in the performance of Tata companies'

'Mistry arrested the downfall in the performance of Tata companies'

October 26, 2016 13:52 IST

'Wherever the businesses are not up to the size of the Tata group, Cyrus Mistry initiated actions to move out of those businesses.'

The ousted chairman of the $100 billion Tata group, Cyrus Mistry

IMAGE: Cyrus Mistry, the ousted chairman of the $100 billion Tata group. Photograph: Amit Dave/Reuters

Cyrus Mistry, the ousted Tata Sons chairman could have handled the Tata-Docomo dispute better, feels Deven Choksey, managing director, K R Choksey, a Mumbai brokerage firm.

Among other things, Choksey spoke to Rediff.com's Prasanna D Zore about the impact the Mistry ouster at Tata Sons will have on the group companies.

How do you think the market is reacting to Cyrus Mistry's ouster?

The market is basically comfortable with an understanding that operating performance of any of the Tata group companies is not getting affected because of this event.

There is also some comfort level in the fact that no individual is running the show at this point of time and that it is a professionally run group.

Finally, the market wants to have clarity on how the way forward will be paved as far as the Tata group is concerned, especially when one is bringing in a new team and leadership which will take the Tata group back to its glory days.

Could you tell us how the Tata group companies performed under Cyrus Mistry?

Importantly, during Cyrus Mistry's leadership the downfall in the performance of respective businesses has been arrested.

More importantly, corrective actions which were required in some of their businesses to make these profitable were initiated under Mr Mistry.

What were those three most important corrective actions which Mistry initiated during his tenure?

In case of Indian Hotels, he basically ensured that the operating performance of the hotel businesses was brought up to an acceptable level.

The actions were initiated (during his tenure), but the full effect of these actions is yet to be seen.

In case of Tata Motors as well, corrective actions were initiated to keep the cost structure under control.

In both these cases, the true impact is yet to be felt, but his corrective actions were in the right direction and one will get to know its true impact in the next couple of years.

Thirdly, wherever the businesses are not up to the size of the Tata group, he has initiated actions to move out of those businesses.

In each of these areas, he has asserted himself by challenging the validity of these businesses which happened under his leadership.

What has not happened, or what could have happened little better is, in the process of finding out the solution for the Tata-Docomo and their UK steel business, I think the decisions (Mistry took) have had some hard repercussions on the group, and those could have been played out in a better way.

The Docomo business going into litigation has had some adverse impact on the business of the Tata group as well as of the country eventually.

These decisions could have been taken care of in a better way.

Now that Ratan Tata is back for four months, what are your expectations from this short tenure?
Do you expect him to continue for more than four months because four months is too short a time to make any meaningful, strategic impact on how the Tata group will be run?

According to me, the group is running on its own professional team of managers.

So, as far as the performance of the companies within the group is concerned I don't think it will have much impact with the involvement of Mr (Ratan) Tata because in any case he had been the chairman emeritus of the group.

He was not involved in the day-to-day activities of the group.

His top-most priority would be to install a new team of leadership which would help the group to look forward with more confidence than before.

Going ahead, with a long term horizon which Tata group companies would you bet your money on?

Each of the Tata group company has a significant amount of potential. What is most important is that these companies have been in existence for quite some time now.

Pinpointing one or two companies would be very unfair.

As I see it, the group has significant amount of goodwill within and outside the country.

So, the businesses which are languishing at this point of time will have to be systematically looked into and provided with a robust leadership.

Any areas where you find value among companies in the Tata group?

Given the current state in which these companies are operating, I think most of the Tata group companies are adequately valued.

If you were to find future value in each of these companies then you would require a clear direction about in which the businesses would head going forward.

Who do you think should succeed Mr Tata as the next chairman of Tata Sons?

Your guess is as good as mine and I would let that happen first without speculating on this issue.

Prasanna D Zore / Rediff.com