Cyrus Mistry and Ratan Tata
Shares of Tata group companies
rebounded on Friday on value-buying after three consecutive days of fall. Despite the bounce-back, the total market cap of the companies
was still down by around Rs 22,000 crore over their closing price on Monday, the day when the news
of chairman Cyrus Mistry’s sacking unfolded.
All group company shares, except for Tata Consultancy Services (TCS), Tata Power and Rallis India, rose on Friday. Tata Motors surged 2.7 per cent, Tata Steel was up 1.85 per cent, while Voltas increased 1.5 per cent. Big gainers included Tata Elxsi (4.2 per cent), Tata Metaliks (5.8 per cent), and Auto Corporation of India (7.8 per cent).
Among the losers, Tata Power shed 1.4 per cent, TCS was down 0.6 per cent, while Rallis India slid 0.3 per cent.
“The fall in stocks was driven more by sentiments rather than fundamentals, and the present problem has more to do with an ego clash rather than governance issues,” said G Chokkalingam, founder, Equinomics Research.
The Tata group is a small economy in itself and the prospects for the individual companies
will not be the same across the board, said Chokkalingam. “Further stock movement will depend on valuations and business opportunity,” he added. For example, with the outlook for top information technology stocks looking bleak, TCS could struggle with growth and the stock could face pressure going forward. Ditto with Tata Steel, which is facing headwinds on account of a global supply glut of steel that has pressured prices.
On Thursday, the Tata group had hit back at ousted chairman Mistry’s allegations saying group companies made disclosures on all impairments and presented a true and fair picture of their accounts to shareholders.
The Tatas said he was asked to go due to his failure to present the board with any long-term vision or plan. The plan, presented to the board in September, was flawed and heavily dependent on one company, TCS.
Besides, the plan, presented late in the fourth year of his five-year term, also lacked emphasis on return on capital of group companies, the source said. There was also no mention of financial discipline and of portfolio rejig, the source said. All these shortcomings were communicated to him, but the advice was not heeded, said an insider, asking not to be named.
The group said Mistry, who has been on Tata Sons’ board since 2006, was fully familiar with the culture, ethos, and governance structure.