Oct 25, 2016 06:12 AM EDT

Contrasting Styles of Functioning and Differences Possible Reason for Cyrus Mistry Sacking

Contrasting styles of function and serious differences between Cyrus Mistry and his predecessor Ratan Tata is the possible reason for the former's sacking as chairman of Tata Sons. After the decision, Ratan Tata became the company's interim chairman.

The Times of India reports that Tata Sons operated differently under Mistry, compared to his predecessor Tata. The company had a taken a strategy of stripping assets under Mistry, compared to Ratan Tata's expansionist policy.

Mistry focused on raising cash, refinancing loans and selling assets after writing them down to tackle the mounting debt of the company. Tata, on the other hand, spent money to expand the company on purchases like luxury car company Jaguar Land Rover in 2008.

Another contrast is that Tata was able to achieve a 57-fold increase in the company's market capitalization from Rs 8,000 crore ($1.19 billion) in 1991 to over Rs 4.62 lakh ($69.1 billion) crore in December 2012. Mistry was only able to double the market capitalization since he took over, $125 billion (close to Rs 8.5 lakh crore).

A Mumbai-based CEO of a global investment bank, who has been working closely with the Tata Group for two decades, told the Economic Times this is bound to happen. "Confrontation is inevitable," he said.

Several of Mistry's decision also didn't go well with Tata Trusts. Mistry disposed some of Indian Hotel Co's overseas properties, and he shut down the UK steel operations.

Many of the company's Mistry disposed of are considered Ratan Tata's legacy.  These companies also helped the group revenues top $100 billion even if the group is hamstrung with ballooning debt.

"Tata was unhappy with the decision to shut down or sell the group's steel business in Europe," said a person close to Tata. "He wanted the group to turn around the loss-making business rather than sell it."

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