MUMBAI: It took two years for Cyrus Mistry to appoint a managing director at Tata Motors after Karl Slym's untimely demise in 2014. Not for want of trying, according to several people that ET spoke to. In fact, Mistry's first three picks were shot down until Guenter Butschek made the cut, taking over as MD earlier this year.
During this period, Mistry was forced to take hands-on charge at Tata Motors as he sought to steer the company out of the doldrums, seemingly with one hand tied behind his back, at least according to this narrative. Always looming in the background, in this telling, was the controlling hand of holding company Tata Sons and behind it the Tata Trusts run by Ratan Tata.
In the scathing letter that Mistry wrote following his dismissal as chairman of Tata Sons last month, he pointed to Tata Motors as a prime example of sentiment trumping business sense. It's no secret that the auto business is something Ratan Tata is passionate about and that the Nano was his dream project. Mistry said in his letter that the Nano was losing so much money it needed to be killed but he couldn't do it.
The people cited above told ET that Mistry's efforts to revive the company were constrained by what they said was a dual power structure.
The people cited above referred to the compensation issue as exemplifying the lack of support for Mistry on the part of Tata Sons and Tata Trusts. In 2014, shareholders staunchly opposed remuneration packages for three executives because of poor earnings. Mistry managed to salvage the situation when shareholders finally agreed to the revised salary proposals in January 2015.
When Mistry took direct charge of the company after Slym's death, Jaguar Land Rover was the only part of it that was doing well. The domestic operation had a tired lineup of models and little by way of future releases that would rejuvenate the company. Besides, dealers were deserting it in droves.