‘Parallel running’ to ‘suffered more’: Everything the new book highlights about Ratan Tata-Cyrus Mistry relation

Ratan Tata started to have second thoughts about Cyrus Mistry's “suitability” by the end of the first year of his apprenticeship under him to give insights and hands-on experience on how to run the group before Mistry took over the position from Tata, according to a book authored by Thomas Mathew titled Ratan Tata A Life, reported the news agency PTI.

Mathew's book, a biography of the late veteran industrialist and philanthropist Ratan Tata, claimed that Tata “suffered more” than Mistry “in a way” from the decision to sack his successor as Chairman of Tata Sons in October 2016, according to the agency report. 

Mistry was chosen to succeed Ratan Tata in 2011, who stepped down as the Chairman of Tata Sons in December 2012. Cyrus Mistry was the Chairman designate before he took over as Chairman of Tata Sons after his retirement, as per the report.

Tata's approval

Ratan Tata approved the recommendation of Mistry from the selection panel while stating two observations. He wanted Mistry to “severe all relations” with the Shapoorji Pallonji Group by creating a separation that would be “legal and tenable”, to which Mistry was the managing director at that time, as per the report.

Tata's second observation was that Mistry would do “parallel running” with Tata for a year to ensure that he got insights and hands-on experience on how to run the Tata Group, reported the agency, citing the book, based on interviews with Ratan Tata himself, his family, friends, former colleagues and business associates.

“Ratan avers that though his interactions with Mistry were largely limited to Tata Sons board meetings, he was impressed with him. When Ratan was able to observe him at close quarters while Mistry was the deputy Chairman, he was reassured,” wrote Thomas Mathew, a retired bureaucrat quoted by the agency.

“But by the end of the one year of parallel running, Ratan began to have second thoughts about Mistry's suitability as the chairman-designate. He recalls that some of the latter's 'sharp interventions' had surprised him.,” said the book, quoted the report.

Tata, deep down, wondered if it would be prudent to appoint a man whose ethos could potentially be in conflict with the Tatas, according to the report.

"Mistry had a particular talent to identify potential pitfalls in strategies", but Tata was “not sure if Mistry would use these qualities for the benefit of Tata Sons and whether he would always uphold the fundamental values of the group,” said the book, quoting Ratan Tata, as per the report.

Later, Ratan Tata stated that he did not have the opportunity to fully assess Mistry. His critics blamed him for bringing the situation upon himself by choosing to stay away from the selection committee, according to the agency report.

Did Ratan Tata suffer more?

Cyrus Mistry was ousted in October 2016 and was, in a way, the “most painful and difficult thing for Ratan,” according to Nitin Nohria, former dean of Harvard Business School. Ratan Tata appointed Nohria to help Mistry succeed, as per the report.

“It was a very hard decision for Ratan to take; I think it took a lot out of him because he had to 'stand in many ways for things that he does not stand for,” said Venu Srinivasan, director of Tata Sons and Chairman Emeritus TVS Motor Company quoted the agency.

“Ratan suffered more than Cyrus in a way, people may not quite understand or accept it and for Cyrus it is certainly something he would not accept or believe but the truth is I think he (Tata) took a lot of suffering, on that score,” he said, according to the agency report. 

Tata wished that Mistry should have resigned after it was clear that he lost the directors' confidence, said the report citing the book.

“Even for me, firing him this way was not our style of doing things. Our lawyers said that if it is not a surgical strike, he would go to the court and litigations would follow,” according to the book citing Ratan Tata, reported the agency.

On Noel Tata

The book also highlighted Ratan Tata's feelings towards his half-brother Noel Tata needing more exposure and experience in handling difficult assignments to succeed him as the head of the principal investment holding firm and promoter of Tata companies, according to the PTI report. 

After Ratan Tata's demise, Noel Tata was appointed as the Chairman of Tata Trusts, the collective of charities which indirectly controls the salt-to-software conglomerate. The conglomerate is worth nearly $165 billion, as per the agency report.