Brand Tata takes a beating

In this file photo of Ratan Tata, who is making a comeback at Tata Sons' interim chairman for 4 months.
The 148-year-old Tata group, India’s largest conglomerate and also one of the oldest, is in the midst of a boardroom battle quite unlike what it has seen thus far. On Monday, the group’s chairman Cyrus Mistry was sacked from his position and his predecessor Ratan Tata was brought back to head the group till a replacement was found.

 

There have been statements and counter-statements made by both sides. Not all of them have been pleasant — Mistry said he was a “lame duck chairman”, while Tata termed his words “unforgivable”.

 

The falling out between Tata and Mistry — the former a member of a much-respected business family and the latter the son of the single largest shareholder in the Tata group — has taken many by surprise. Brand experts say the episode is unfortunate. “This could have been handled in a far better way. There has been an impact and I would point out to the trust one has had in the Tata brand. I think that has been shaken up a bit,” says N Chandramouli, CEO of Trust Research Advisor, that brings out the annual Brand Trust Report.

 

The Tata brand has consistently ranked first on most India brand valuation reports. In the latest Brand Finance report released this July, the Tata brand retained its number one slot despite falling 11 per cent in terms of brand value to $13.7 billion. At that time, Brand Finance had indicated this was on account of its vulnerability in the steel market and its huge exposure in the UK after Brexit (Britain’s vote to exit the European Union).

 

On the Brand Trust Report, however, Chandramouli says the trajectory has been a bit more chequered, with the Tata name coming in at No 2 in 2010 and 2011, then slipping to the fifth position in 2012 when Ratan Tata retired as chairman. “It regained ground again in 2013 after Cyrus Mistry took over as chairman of the group and has steadily slipped to the fourth and fifth slots in 2014 and 2015 as Mistry struggled with what he describes as legacy issues at the group,” Chandramouli adds.

 

But, brand experts such as Harish Bijoor and Alok Nanda believe the blip on the Tata brand is a temporary one.

 

“A boardroom hiccup has a habit of affecting temporary brand equity. Yes, it is not savoury when it comes to the fore, but I believe the consumer brand equity has not been affected at all by this episode. The investor brand equity has been ruffled, followed by employer brand equity at the top level, but the biggest impact has been at the political level with people taking sides. I think all of this will abate in the course of time,” says Bijoor.

 

Nanda says potential employees might be nervous of joining the Tata group given the manner in which Mistry’s ouster has unravelled. “But, if the group stays the course and is able to keep its attention on performance, I think it should be able to bounce back.”

 


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