TATA

MISTRY-
DEMISTYFIE -

D
WHAT HAD HAPPENED?

The Tata Group surprised everyone when on

October 24, the Tata Sons board, ousted
Cyrus Mistry as chairman.
Why was Cyrus Mistry removed?

Without giving any specific reasons, Tata Sons simply said

growing trust deficit and repeated departures from the
culture and ethos of the Tata group was the reason behind
the removal of Mistry.

The Trusts, were also reportedly unhappy that the

performance of Tata Sons was increasingly dependent on
only two companies - Tata Consultancy Services and Jaguar
Land Rover.
Whose decision was it for Mistry to go?

The board in its collective wisdom and on the

recommendation of the principal shareholder (Tata
Trusts) decided it may be appropriate to consider a
change for the long term interest of Tata Sons and
Tata Group. There is no change at the levels of CEOs
in the operating companies,
Market since Mistry took charge on
December 28, 2012
Tata Consultancy Services and Tata Motors - gained
92% and 81% respectively.
Tata Communications increased by 183%.
Tata Power declined 23%, Tata Global Beverages fell
4% and Tata Steel was also down 0.50% over the
same period.
Market since Mistry took charge on
December 28, 2012
The market capitalization of the listed companies of
Tata Group stands at around $125 billion now or
about Rs 8.5 lakh crore, up from Rs 4.6 lakh crore in
December 2012.
Combined market valuation of all listed companies
of Tata Group doubled during the four-year tenure of
Mistry.
PERFORMANCE OF TATA GROUP - 2012

http://www.hindustantimes.com/business-news/tata-group-stocks-tumble-on-
sudden-cyrus-mistry-exit/story-zyI9KgKMK9Q5jsVGBYkeeO.html
PERFORMANCE OF TATA GROUP - 2016

http://www.hindustantimes.com/business-news/tata-group-stocks-tumble-on-
sudden-cyrus-mistry-exit/story-zyI9KgKMK9Q5jsVGBYkeeO.html
Markets response on Mistrys exit

Tata Global Beverages and Indian Hotels have shed

near 13% and 17% respectively.

Among the major Tata Companies, Tata Motors

declined 1.2%, Tata Steel was down 2.5%, Tata
Communications fell 2.4%, Tata Power was down
1.9% and Tata Consultancy Services fell 0.7%.\
 Foreign institutional investors and mutual fund
houses hold sizeable stakes in many of these
companies worried about their investments getting
eroded further.
EXPERT OPINION
Vinod Nair, head of research at Geojit BNP
Paribas Financial Services.

The sudden removal of Mistry took the market by

surprise and in the near-term we could see some
volatility in Tata Group stocks. It raises questions on
the governance front too. However, all the
companies are independently managed and so their
operations wont get impacted,
Dipan Mehta, Member, BSE & NSE

"Cyrus Mistry's direction was very well received by the street.

His exceptional focus on profit, return on equity and divesting the
businesses which were not performing with a lot of great of
aggression was what had made the group do exceedingly well in the
market.
"Maybe the group should explain the reason for such a resignation. I
think investors in the market certainly looking for specific reasons
that would give insight into the functioning of the Tata Group for
which we have very high regards as far as corporate governance
standards are concerned."
Ambareesh Baliga, Market Expert

"This was least expected from someone like a Tata

Group and clearly the market doesn't like instability
in the senior management and that too this is the
topmost management."
Prakash Diwan, Altamount Capital

"The uncertainty that this event would cause is going to put few
companies in more distress than the others. So, if you look at Tata
Steel, if you look at Tata Global Beverages these are companies
which are in the throes of restructuring of such."
"Tata Steel, we all of us know, has been struggling with the kind of
solutions that it needs in Europe and if the top management were to
be taken away and a new incumbents come in with the next 4-5
months everything goes in a limbo. I don't think people are going to
be willing to wait for a phase of uncertainty, so you will see a little
bit of flutter in the stocksTata Global Beverages, Tata Motors and
possibly, Tata Steel andTata Chemicals as well.
 What could probably get saved is probablyTCS,
because that is a professionally run business, so
really not much of an influence from the top
management, but in short this is going to be
definitely inhibiting for growth for these stocks were
the counter is to do well and it will probably give
them a time correction after a while till some new
announcements come through."
MARKET REACTION TO NEW
APPOINTMENT
Most of the large cap stocks in the Tata stable ended weak, shares
of smaller companies rallied.
About Rs 20,000 crore of investor wealth in Tata group stocks was
eroded.
The 4% decline in TCS shares, which resulted in the companys
market capitalisation falling Rs 18,000 crore, contributed the most
to the drop in Tata Group companies valuation.
Titan fell 1.5%, while Tata Motors, Tata Steel and Tata Elxsi shares
declined by half a percent each.

 EXPERT OPINION ON
CHANDRASHEKHARANS
ENTRANCE
Ajay Bodke, CEO & Chief Portfolio Manager, PMS of
Prabhudas Lilladher
By selecting N Chandrasekaran as the Chairman of Tata Sons,
the selection committee has sent an unambiguous signal to all
the stakeholders that they have chosen a person who has
successfully managed a global enterprise straddling various
geographies and is thus conversant with the regulatory and
cultural milieu prevalent in both developed and developing
economies and is also firmly rooted in the socially-conscious
TATA ethos.
A K Prabhakar, Head of Research, IDBI
Capital
Move is very positive for the Tata Group companies.
He is the internal person who understands the culture of Tata as he
has grown with that culture for a very long time. He has taken TCS
to the next level and has a very good reputation with Ratan Tata.
He will be a good replacement on the Tata board as he would find a
lot of support. Tata group companies will benefit out of it, but TCS,
which holds the maximum market capitalization might see some
negative reaction, because he was key member in building TCS.
Vinod Sharma, head of private client
group, HDFC Securities.
The market is fine with Chandrasekarans appointment as
Tata group chairman, but foreign investors initial reaction to
his departure from TCS is not great because business may be
impacted in the near term,
Vallabh Bhansali, Chairman, Enam
Group
It is rather a sad circumstance in which Chandra is
appointed but from the group point of view, it is a very
good news. He would still have a lot of scope to direct
and guide TCS. Chandra has known this company for
so many years that he can talk about it in his sleep.
Shareholders of TCS should not be worried.
Hemendra Kothari, DSP BlackRock MF

N Chandra understands the ethos of Tata Group which will help

him as Tata Sons Chairman. I think the appointment will
benefit all other companies including TCS and the bankers will
be more confident now to lend to the Tata Group companies.
Chandra has created great relationship with clients, bankers
and other people.
What are the corporate governance
lessons from the Tata-Mistry feud
The biggest lesson is that as an investor, invest in
simple companies rather than these complex
holding companies.
Because any time you invest in a complex holding
company, this is one of the prices you payyou
have very little control over process because of the
holding structure.
- Aswath Damodaran
THANK YOU!