Tata to Mistry - Part 1

Like many others, I will not say that I was shocked by the removal of Cyrus Mistry as Chairman of Tata sons. Believe you me when I say, I was half expecting some change. Ever since the start of legal battle with Docomo, I was sensing some rift in the top management. In the Board meeting on Monday, six Directors have voted for removal of Mr Mistry,while two Directors had abstained. The ninth member of the Board,Mistry,could not vote.He continues to remain a Director.

Tata sons has two companies in the group which are cash cows. They are TATA Motors and TCS (Tata consultancy services). The two companies alone account for more than half of the revenue of US 103.5 billion.International revenues account for more than 70 percent of the revenues and most of the capital expenditure was in overseas areas during the last three years. Shapporji Pallonji,18.5 per cent shareholder in Tata sons and father of Cyrus Mistry, could challenge this decision in a court of law.Mohan Parasaran, a leading lawyer has said thus: "I think Shapoori Pallonji could challenge this decision although I think all the rules ere strictly followed and I was convinced". He also said that that fifteen days ago Mr Ratan Tata and another Director had asked Mistry to step down,but he refused. Tata group also consulted P.Chidambaram.

My guess for the removal is this. Mr Mistry was tying his best to change the management structure of the group at very senior levels.Most of these employees have remained loyal to Tatas for many years. There was some resentment.Mr Mistry was also involved in the costly legal battle and settlement with Japanese telecom operator NIT Docomo. He was also seriously trying to sell Tata Steel's loss making UK business. This has now been put on hold.According to newspaper reports "nuanced changes to Tata's values and management style" led to the removal of Mr Cyrus Mistry.Ratan Tata has said that it was in the interest of long term stability Mistry was removed.

Ratan Tata will take over as interim Chairman for four months. A Selection Committee is entrusted with the job of finding the new Chairman within a period of four months. Mistry took up his position in December 1992 with lot of promise. It is sad that his short career with the Tatas had to end in this way. The Group Executive Council (GEC) consisting of outside professionals appointed by Mistry has been abandoned.

While maintaining that TATA Brand s bigger than any individual, Mr Hrish Salve, legal counsel for Tatas in many cases has said that the Group had lost its faith in the leadership of Cyrus Mistry.The response from Mistry is "I take tough decisions for right reasons.

Kashmir, thy name is TROUBLE

There is no law and order in Jammu and Kashmir. The coalition Government there is not able to control rioting and arson.Since the death of Burhan Wani on July 8 in an encounter,Kashmir has remained closed for the last 114 days.Shops are closed and streets are deserted. Sri Nagar looks like a ghost town.I think that BJP should withdraw from the coalition Government and enforce President's rule. Mehbooba Mufti is not able to manage the situation. In fact,just to save this lady, India released LeT chief Hafiz Syed, some years ago.The State has suffered enough.I think enough is enough.

Education in Kashmir faces another challenge.Over the past three-and-a-half months, at least one school in each of Kashmir's ten districts have been burnt or suffered damages in fire.Five schools were burnt in the last five days alone.Officials of the Directorate of School education in Kashmir have said that 25 Government middle,high and higher secondary schools have been burnt mysteriously during the unrest. Of this, seven schools were completely reduced to ashes,while the remaining 18 schools were damaged partially in the fire. Two very famous private schools have also been damaged.The schools were attacked mysteriously in the middle of the night.

Arson is not the only issue which is plaguing education in Kashmir.These days, many schools in capital Srinagar have been occupied by the security forces who were brought in for law and order duty. Atleast seven prominent schools in Srinagar have been housing many companies of the para military forces.The Government has maintained that security forces would be vacated once the situation improves.After schools, LeT has threatened banks in the valley on Thursday.There have been 53 ceasefire violations since surgical strikes. Pakistan has targeted 70 border posts during last two days to facilitate entry of fidayeens into India when there is exchange of fire between the two countries.This has been their strategy for the last 50 years

Apart from all this, civilians living in border areas are being attacked in villages along the border either by Pakistan military or fidayeens.

Kashmir, thy name is TROUBLE.

Tata to Mistry - Part 2

As a Corporate Watcher for the last thirty years,I can honestly say that there is much truth in what Cyrus Mistry has said in his letter to Directors of Tata Sons after his sacking .In fact Tata may find it easier to dismiss Mistry,but find it very difficult to counter effectively the points raised in the letter. Ratan Tata's acquisitive habits and his lack of focus on returns on investment have destroyed billions of dollars in share holder value.Acquisition of U.K.Steel plant through enormous debt and continuation of Nano plant not only shows his lack of focus on returns,but his mindless expansion through borrowing.The philosophy of "Borrow and create assets" has landed many Indian groups in big trouble. ESSAR is an example.One thing can be said about Tatas though-- there is no siphoning of funds.

Ratan Tata's back-seat driving ,while in retirement,has thwarted Mistry's efforts to re-structure the group. Any new Chairman will face the same problems like Mistry. As Tata trusts hold 68 per cent in Tata sons, Ratan Tata will always be there and he will not give full freedom to any one. Most of the companies in the group are making either insignificant profits or losses. The two major exceptions are TCS and Tata Motors.

Patanjali - paving the way

Patanjali,brain-child of Baba Ramdev,has finally received the acknowledgement of the Goliaths of the FMCG industry.India's Body Shop,Patanjali,has been acknowledged as a predator by most established FMCG firms which are to-day battling with drop in consumer demand and rising input costs.

Hindustan Lever,the largest FMCG firm operating in India saw its volumes grow at the slowest pace in five quarters when it reported its Q 4 earnings recently.Colgate,whose sales grew at the slowest in 44 quarters recently acknowledged the threat of Baba Ramdev's Patanjali to its market share.Brokerages such as Credit Suisse have downgraded Colgate Palmolive to "neutral" as Patanjali's tooth paste has begun eating into its market share.

A year ago, no one thought that Patanjali would make the MNC FMCG giants cower in fear.At best,Patanjali was supposed to knock down Emamis and Daburs of the world,not HUL or Colgate.Most of the FMCGS have not brought high technology to India. The only good thing that they have done is to provide employment to a number of Indians.

'Bravo ' Patanjali.You have just made a beginning.

BRI(C)S

I do not know for how long China will continue its membership of BRICS--a group comprising Brazil, Russia. India, China and South Africa.India signed a lot of bilateral agreements with Russia during the the BRICS meeting in Goa. The relationship with the other three countries is quite good. India is not able to improve its relationship with China inspite of its best efforts.It is China which blocked India's efforts to join NSG.(Nuclear Suppliers Group). China has also blocked a resolution in UN for action against JeM terrorist Mazood Azhar. While the the meeting in Goa had condemned terror,no country was specifically mentioned,thanks to China. Prime Minister Modi,however, had categorically stated that Pakistan is the mother-ship of all terror activities in South Asia.

The Chinese President Xi Jinping left India yesterday. On the same day, a Chinese spokesman had stated in China that no country is individually responsible for terrorism. He also mentioned that Pakistan had itself suffered from terrorism.China's double speak proves clearly that India can never hope to win favours from China.China's embrace of India's troublesome neighbor is indeed a cause for great concern,

In the past,Mao Zedong described China's relationship with North Kores as "Chun chi xiang yi"--as close as lips and teeth.For decades North Korea was the only ally of China. In Beijing to-day, there is a new epithet that is currently flavour of the moment for China. "Ba tie" or "iron brother Pakistan".It is out of their selfish interests, China is solidly behind its "iron brother". The China Pakistan Economic Corridor (CPEC) shortens access to Persian Gulf oil for China--source of 80 per cent supply by bypassing Malacca straits. Distance via Malaca Straits 12,000 km--Distance via CPEC 3000km. When US began to move out of Afghanistan in 2009,China started scaling up its engagement in Pakistan.

The country is waiting

Shakespeare has said "Uneasy lies the head that wears the crown". I am reminded of this when I think of our Prime Minister Shri Narendra Modi.When he was Chief Minister of Gujarat, he had made some very bold statements against Pakistan. He must have realised by now that with his new position comes enormous responsibility.

"To launch a military action against Pakistan or not" is the problem before him.The whole country wants punitive action to be taken against Pakistan.People want the Govt. to be pro-active and not re-active.They are eagerly waiting for what the PM is going to do.If India attacks Pakistan, they will loose the sympathy of the world. Besides,when Pakistan is attacked, China will come into the equation. China is solidly behind Pakistan. The Chinese Premier has made a statement yesterday" "China's relationship with Pakistan is unbreakable".We may have to face both Pakistan and China if we decide on punitive retaliatory attack.On the other hand, if we do not take punitive action,our PM will loose his credibility with the people.

Neither a military strike nor peace talks will make Islamabad drop its sponsorship of terror.India will have to wage a sustained diplomatic campaign which names and shames Pakistan as a state sponsoring terror.India should also lobby with EU,China and Gulf counties.A word from Beijing will have more impact with Pakistan than a word from Washington Gulf countries,because of falling demand for oil,need India's help to diversify their economies.

Pakistan talking about human rights violations in Jammu and Kashmir is indeed strange.However there is some truth when they that thy have been themselves victims of terrorism.That said, right from independence in 1947, Pakistan Army has has been training the fidayeens or jihadis to fight their proxy war.There is a saying in the Bible that "those who live by the sword shall perish by the sword".Pakistan which is breeding terrorists and using terrorism as an instrument of state policy will one day be swamped by terrorism.The Europen Union Parliament has warned Pakistan yesterday that they will impose sanctions unless Pakistan stopped the atrocities in Baloochistan.

What will the Prime- minister do? .The whole country is waiting.

Congratulations Maruti Suzuki

Congratulation to Maruti Suzuki. It has attained cumulative exports of 15 lakh vehicles.The vehicles have been exported to over 100 countries including Europe,Latin America,Sri Lanka and Africa.Though exports are inherently subject to economic and policy changes in the destination countries,the company has been able to maintain an upward trend in exports over the years.

Maruti Suzuki has become a symbol of "Make-in-India mission of our Prime -minister Modi and has taken its exports to a new level.Their latest model "Baleno" has been exported to Japan and has become a big success there.

I have used a Maruti Esteem car for five years without any problem.The company is run very professionally and has an excellent management. I have known two friends who have become very rich by keeping their faith in Maruti and investing in its shares.