Cyrus Mistry: Caught Between Playing Maverick Entrepreneur And Responsible Manager

“My conscience is clear,” said Cyrus Mistry on March 30, 2021. “We will celebrate the good times and take the knocks on our chins.”

Little did the world know then that these might be his final words on the matter at hand, and perhaps on any matter at all. My last exchange with him, one of the very rare such occasions, was shortly thereafter—“Maybe we best catch up after it is finally closed.” He was of course referring to his court battle with the Tata Group that lingered on since his abrupt firing and was concluded only recently.

This was the rift that drew a line down the middle of nearly every South Mumbai dining table, folding them into either the Ratan Tata camp or that of Cyrus Mistry. On Oct. 24, 2016, around five years after he had pipped other global leaders in the running to Tata’s top job, Cyrus Mistry was fired without explanation and by what appeared to be an orchestrated vote of no confidence from the Tata Sons’ board.

He fought the dismissal ardently in courts. He told a friend he was doing this because he had held up the values that had earned him the post of Tata Sons chairman, and leaving his dismissal undisputed would misrepresent his convictions.

Those lay in the issues that Mistry flagged to the board on the day after his dismissal. Several of them were resolved in a similar fashion to what he had predicted.

The first, high-decibel issue was the tiff with Tata’s Japanese telecom partner NTT DoCoMo that wanted an exit on a pre-agreed price for its share in Tata Teleservices. More than the issue with the partner seeking a compensation of Rs 8,000 crore was the looming debt that was not payable based on Tata Teleservices’ cash flows, argued Mistry. He did curtail further investment in telecom and explored the sale of the business with strategic buyers, unfortunately to no avail. About a year after his exit, the group wrote off loans worth Rs 28,651 crore on the mobile service provider. The foreign partner was settled after a diplomatic, judicial and legislative intervention during and after Mistry’s tenure. Moreover, it exited the business handing assets over to a taker at extreme distress valuations.

Cyrus Mistry was negotiating a deal to relieve pressure from U.K.-based Corus, which Tata Steel Europe had acquired in 2007, because of the losses it was incurring. Over five years since 2011, the company had incurred write-offs worth around Rs 16,500 crore. Mistry was in negotiations with Germany’s ThyssenKrupp. In its criticism Tata Sons said the attempt from Mistry was uncalled for. However, in the years that ensued, the Tata Group entered into a negotiation with the same German company, attempting a joint venture and then a merger—both of which were turned down by the European regulator. The company has now been split into two—the U.K. and Europe—operations as it continues to search for buyers for certain assets.

As chairman of the apex group company perhaps he needn’t have tried as hard to head Tata Motors, that operated without a CEO for two out of Cyrus Mistry’s four years at the helm. He did, however, make the effort to get a pulse of the distribution network. He treaded lightly around the Tata Nano, which was Ratan Tata’s pride project but incurring losses. Perhaps it was his hesitation that held him back, or perhaps he feared a pushback. In either case, production of the Nano was terminated in 2018. More importantly, under his watch Tata Motors started three new car models that helped turn around performance, but only after Mistry had left.

From a timing perspective, Mistry’s sudden firing appears to synchronise with his decision to buy the renewables energy arm from Welspun at a pricey valuation. There was a skirmish of sorts in the boardroom over the purchase, which the Tata Trust representatives on the Tata Sons’ board argued was delivered to them as a fait accompli—instead of a discussion before any agreement. In hindsight, with the increased focus on renewable energy and the valuation boom in the sector, the acquisition still seems accretive. The group completed the purchase after Mistry’s departure from the chairman’s post.

All in all then, it seems like Mistry triggered good beginnings for the group. This was not lost on the directors of the operating companies of the Tata Group. Several of them, including Nusli Wadia, chairman of Bombay Dyeing; and Deepak Parekh chairman of HDFC, publicly supported decisions Cyrus Mistry took during his tenure.

Business by its nature can be a cruel thing. The last decade and a half has seen extremely sharp swings starting with the 2008 global financial crisis, its prolonged aftermath around 2013 and then Covid-19. Snapshots of each business at varying points during this period can present contrasting pictures of the businesses and its leaders. It is well known that the Tata Group was advised once to exit the steel business altogether. Taking a contrarian stance based on personal perception and risk appetite is what segregates leaders. Mistry was advised to “be your own man”. To that he held true till the end.

His acceptance of the role which sprung him to fame and then infamy was reluctant. He started out as a selection committee member before turning into a candidate. For many observers the path ahead was going to be riddled with mines, as he became the first Tata Sons chairman who didn’t simultaneously head the Tata Trusts.

No one had predicted then that the dichotomy of perspectives would be this acute. He found himself caught between the position of the maverick entrepreneur who risks high stakes in search for new boundaries and the responsible manager who answers to stakeholders. Mistry, as his friends recall, had been the latter since quite a young age.

Before he even entered his candidature for chairmanship, he consulted his father, who also died earlier this year at 93 after suffering from prolonged Alzheimer’s, and his brother. Accepting the role meant letting go of his own firm, SP Group, and the potential of ever having executive say in it. A family publication said that in the two decades that Cyrus Mistry and his brother ran it, the SP Group grew 600 times to Rs 18,000 crore.

So once he was out of the Tata Group, where he was expected to spend his next two decades, finding his bearings took effort. It is in this period his venture fund was set up. As he fought the court battle, he also scouted for cutting-edge technology investment opportunities while dawning a new look. This transformation will now remain unfinished, but hopefully sow seeds for a new beginning for the generations to come. Mistry will be remembered for his quiet and gentle manner even in the face of difficulty.

Deepali Gupta is a senior business journalist and the author of `Tata Vs Mistry: The Battle for India's Greatest Business Empire’.

The views expressed here are those of the author’s and do not necessarily represent the views of BQ Prime or its editorial team.