Case Solutions

• Case Synopsis
• Problem definition
• Learning objectives
• Alternatives solutions
• Criteria
• Analysis
• Best possible solution
• Key take away
• What happened next?
SYNOPSIS

•  On October 24, 2016, employees of Tata Steel Limited (Tata Steel) received an email
from Ratan Tata, stating that the board of Tata Sons Limited (Tata Sons), the holding
company of the Tata Group, had removed Cyrus Mistry from his role as company
chairman. The days following this decision were marked by allegations and counter-
allegations by Ratan Tata and Mistry regarding the possible motives behind this
decision, including, among others, corporate governance failures at Tata Sons.
Subsequently, Tata Sons urged the shareholders of listed Tata Group companies to
remove Mistry from the chairmanship and directorship of their companies.
• This case follows the background of the dilemma faced by Tata Steel shareholders—
whether to allow Mistry to continue as a director on the company’s board. Tata Steel
shareholders also needed to decide whether Nusli Wadia, an independent director at
Tata Steel and a supporter of Mistry, should also be removed from his independent
directorship.
LEARNING OBJECTIVES

• Analyze, in the context of the above developments, the financial

performance of all the Tata Group companies in general and Tata
Steel in particular.
• Analyze the complex nature of the relationships between promoter
shareholders, minority shareholders, government-controlled financial
institutions, independent directors, and executive directors.
• Using a game-theory framework, determine the best available course
of action for minority shareholders
ASSIGNMENT QUESTIONS

• How does India’s corporate governance scenario differ from the situation in
developed countries? Discuss by using Tata Group as an example.
• How would you rate Cyrus Mistry’s performance as the chairman of Tata Sons?
• What are Tata Sons’ main charges against Cyrus Mistry? How valid are these charges?
• What role should the independent directors play in companies owned largely by
promoters? How would you rate Nusli Wadia’s performance as an independent
director of Tata Steel?
• What should the shareholders of Tata Steel do in terms of the resolutions regarding
Cyrus Mistry and Nusli Wadia?
• Why did Mistry resign from the boards of the various Tata Group companies?