Management

Andy Mukherjee is a Bloomberg Gadfly columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.

The Tata Group fracas appears to have shed all earthly inhibitions and gone to a galaxy far, far away.

In this Star Wars space opera, Cyrus Mistry, the recently ousted chairman, was Sith Lord Darth Vader who had brainwashed the PR folk -- the "old and venerable" conglomerate's noble Jedi warriors  -- and used them to smother criticism of his performance.

Losing Power
The growth in Tata Group's total net profit between 2004 and 2011 has all but stalled since
Source: Bloomberg
*Data for 2016 are trailing 12-month figures for the most recent quarter.

That's probably why a Sept. 24 Economist report, titled 'Mistry's Elephant,' which was denounced by the group for drawing "preconceived conclusions based on an inappropriate interpretation of selected data," was on Thursday extolled by the same people for being "really a well-balanced and critical review."

Not just that. Thursday's press statement ticked off the group's "PR machinery" -- in other words, itself -- for dismissing views that didn't toe the line being peddled by Bombay House, Tata's headquarters. Even the author of the Economist report is baffled by the sudden change of heart.

As for investors who have seen more than $12 billion of their Tata Group wealth vanish since Oct. 24, the day Ratan Tata reclaimed control, only three questions really matter:

  • Who's the Chosen One to restore balance to the Force?
  • How many episodes are left?
  • Where's the popcorn?

The answer to the first is far from obvious.

Ratan Tata's camp is now accusing Mistry of trying to hijack control of operating companies in the $100 billion salt-to-software conglomerate. Mistry's side says the allegations are untrue. Tata is mocking Mistry's poor leadership for botching up Tata Steel Ltd.'s U.K. operations, claiming that the Scunthorpe steel plant it sold in May to Greybull Capital LLP for 1 British pound has since seen a dramatic turnaround. Mistry, on the other hand, blames Ratan Tata's $12.9 billion purchase of Corus Group Plc's steel assets in 2007 for the group's debt overhang.

Since Ratan Tata is back only in an interim capacity, the group needs a new chairman to end the spat. But until Mistry agrees to sell his family's 18.4 percent holding in Tata Sons Ltd., the holding company, the lightsabers won't get turned off. It's unlikely that the CEO of a global corporation would want to jump into the fray as Luke Skywalker -- and get his or her reputation fried in the process. Besides, after Tata Group's press statement accused Mistry of dismantling structures put in place by "visionary founders and generations of Tatas," it's not even clear if the group wants to be anything other than a family-run enterprise.

Collateral Damage
The market value of India's Tata Group has slid since it fired its chairman on Oct. 24
Source: Bloomberg

It's a much more than just a war of words. Ratan Tata is trying to evict Mistry from the boards of operating companies, but it's proving to be far from easy thanks to a few independent directors who're supporting Mistry. But are those directors taking up the cudgels to uphold corporate governance standards, or are they simply trying to avoid the embarrassment of firing a chairman after showering praises on him?

Like in everything else with the Tata Wars, it's impossible to establish who's with the Force and who's gone over to the Dark Side. Or for that matter, how many more episodes are left in the sordid saga. The best investors can hope for is that until the group makes up its mind on whether it wants to slash debt, gun for growth, or do a bit of both, Tata Consultancy Services Ltd., the group's ATM, will keep coughing up more cash so Bombay House can fully engage in the tussle for control. That's the popcorn.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Andy Mukherjee in Singapore at amukherjee@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net