Cyrus Mistry - A good fit to preserve Tata Group's Parsi ethos, but a reluctant Chairman

Cyrus Mistry had a short and controversial stint at Tata Sons as chairman. When he was picked up for the top job to replace Ratan Tata by a five-member succession committee , he had two very strong connections with the group. One, Mistry was a distant relative as the brother-in-law of Noel Tata—Ratan Tata's half-brother. Mistry had been part of the Tata Sons board since August 2006, representing his family's 18.5 per cent stake. In fact, Mistry was a director on the board of Tata Elexi from 2000 to 2009 and also sat on the board of Tata Power until 2006.
 
Cyrus took the Tata Sons directorship from his father, Pallonji Mistry , who retired from Tata Sons after reaching the age of 75. Pallonji actually picked up his younger son, Cyrus and not his elder one, Shapoor Mistry. Clearly, Cyrus was seen as capable of managing the family interests better.  His grandfather, Shapoorji Mistry acquired the shares in Tata Sons way back in 1930s.  

Though Mistry was part of the board of Tata Sons, he was actually reluctant to take up the job as he lacked experience of handling a large group like Tatas with multiple companies, sectors, and a multi-cultural workforce across the globe.
 
Ratan Tata was also instrumental in convincing Cyrus to take over that time. He was seen as a good fit to preserve the Parsi culture, values and ethos of the Tata group.
 
When he took over in December 2012, Tata Sons was doing around $ 100 billion in sales. Mistry was executive vice chairman for one year under Ratan Tata and then executive chairman for almost four years.
 
The younger son of an Indian-born Irish businessman, Mistry did try to be different. As a chairman, he created a different structure for advising him. Ratan Tata had a group executive council (GEC), the highest decision-making body, where he had a mix of seasoned Tata professionals as well as outsiders. Mistry hired a young team of Madhu Kannan, a former BSE CEO, N S Rajan , former EY India; and Mukund Rajan , Raghuram Rajan's brother, to advise him on group matters. The group's challenges were humongous as many of the global acquisitions abroad came under severe pressure.

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He also had to work with old guards at Tata Group as well as the Tata Trusts, which owned a majority stake in the Tata Sons. During his tenure, there was a communication issue between the Tata Sons and Tata Trusts. Mistry's five-year plan also faced rough weather as it involved writing off some investments and managing the legacy issues. 
 
In fact, a rift between Mistry's team and Tata Trusts directors started building early on. Tata was also not very happy with Mistry's performance, despite spending five years at the seat. The group's dividend income was on the decline. There was no progress in three big companies — Tata Steel Europe, Tata Teleservices (Docomo) , and Tata Motors. Mistry's defence was that the legacy issues were creating problems in taking the group forward.
The group's indebtedness increased, and the return on investment fell during Cyrus' time. There was also a market share drop in Tata Motors.
 
After leaving Tata Sons, Mistry was back in the family business. He first entered the board of Shapoorji Pallonji & Co. as a director in 1991, and later, in 1994, he was appointed managing director of the flagship group company. Under Mistry's guidance till he joined Tatas, Shapoorji Pallonji's construction business had grown from a turnover of $20 million to $1.5 billion. Many suggest Cyrus was instrumental in the group's infrastructure business from the mid-90s onwards. Because his father was too old at the time, the entire group reported to him.

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