Ratan Tata takes credit, Cyrus Mistry shares credit

Ratan Tata takes credit, Cyrus Mistry shares credit

The Tata Sons statement of 10th November 2016 insinuated that Mr. Cyrus Mistry had made no "material contributions" to the success of TCS and JLR, which the statement implied were a manifestation of Mr. Ratan Tata's personal vision and efforts.

Mr. Mistry would like to place on record that while TCS and JLR justifiably receive a lot of media attention, the group's portfolio has extraordinary breadth. Companies like Tata Chemicals, Tata Elxsi, TGBL, Titan, and Voltas, to name just a few, are all leaders in their respective fields.

It has always been Mr. Mistry's belief that the primary credit for the financial and market share success of the group companies rests with the leadership teams, and more importantly, the commitment of the thousands of employees who work tirelessly to drive these results.


TCS had in Mr. F.C. Kohli a visionary founding CEO. Today, Mr. N Chandrasekaran continues to provide strong and able leadership. Chandra, his leadership team, and the nearly 350,000 TCS employees have made us proud. Over the last 4 years, the TCS leadership team has engaged well, and complemented, the Board. In his role as non-executive Chairman, Mr. Mistry's primary involvement with TCS has been focused on future-proofing TCS strategy and helping fortify their relationships at the C Suite level by leveraging the strength of the Tata Group.

The high dependence on TCS in the Tata Sons portfolio is a well-known fact. This was repeatedly flagged in strategy presentations to the Tata Sons Board by Mr. Mistry. Apart from strengthening other group companies, Mr. Mistry maintained that keeping TCS strong and relevant is critical.

For TCS to flourish, it was vital that TCS transformed from an IT solutions provider to a strategic partner because the digital imperative had become a strategic differentiator for many organizations. Consequently, the client relationship needed to move from engaging with the CIO (with whom traditionally Indian IT company CEOs maintained their relationship) to the CEO. As Chairman of Tata Sons and Tata Consultancy Services, Mr. Mistry's access to senior stakeholders across the world was an enabling platform. Over the last 3 years, Mr. Mistry met at
least 60 global CEOs, some along with TCS leadership, to reinforce the capabilities of TCS for organizations to co-innovate in the digital world.

The results of TCS over the past 3 years when examined with respect to the profile of clients demonstrates the power of this strategy (see Table).

Just last year, TCS had undertaken one of the largest skill upgradation programs in corporate history. Over 135,000 people have been trained to be ready for the new digital world.

TCS joint venture in Japan and industry leading growth in Europe are all part of a longer term strategy to ensure resilience. A more globally balanced portfolio of business makes TCS robust by hedging against ongoing geo political risk.

Several opportunities lie ahead. The board and the management explored cyber security, health, bio informatics and deep learning. Acquisition of companies with capabilities in these spaces and others required TCS to have available a reservoir of cash. Hence, one of the first items for Mr. Mistry on his joining the TCS Board was to focus the management on reducing the gap between profits and cash. Mr. Chandrasekaran and his team responded splendidly, improving the cash conversion cycle from 49% in 2012 to 92% in 2015. The improved
performance enabled TCS to declare a special dividend without compromising firepower for acquisitions. Cash and cash equivalents doubled over the same period to Rs. 20,500 crores.

Over the past 3 years, Mr. Mistry attended TCS customer summits in USA and Europe. In addition, he engaged with employees at TCS centers located in Pune, Chennai, Bengaluru, Hyderabad, and the USA. In the past three months, he engaged with the TCS's Innovation and Design Centre at Santa Clara, USA, reviewed the TCS health care partnership with the University of California, Berkeley, and worked with the TCS Canada leadership team in Toronto. Mr. Mistry was supposed to spend two days in late November with the TCS Japan team to attend their customer summit in Japan and help emphasize the Tata Group's long term commitment to Japan.

Based on his many touch points with the company's stakeholders, the TCS leadership team, and his interactions with the young associates, Mr. Mistry is confident that the best is yet to come for TCS.


Like TCS, JLR is fortunate to benefit from the strong leadership of Mr. Ralf Speth and his leadership team, who lead the highly committed JLR employees. JLR is one of the strong performers for the group today. The significant efforts of Mr. Ravi Kant, former Vice Chairman of Tata Motors, who virtually camped overseas to see the integration through and lead the transformation, too deserves special mention.

JLR is at a critical juncture. The decisions taken today will decide its future resilience. The company faces many challenges, but also many opportunities. JLR strategy under Mr. Mistry's Chairmanship has been to achieve scale as well as minimize currency and supply chain risks by investing in new facilities. Its lack of scale required it to invest disproportionately compared to the industry in new technologies that will help meet the regulatory requirements and differentiate its products. This has been done without leveraging the balance sheet and retaining adequate liquidity. The result is a stronger company that will reward the shareholders more consistently in the future.

Mr. Mistry has also been closely associated with JLR, its strategy meetings and design reviews. Between 2012-16, Mr. Mistry spent over 120 days including 38 days on JLR design review, 56
days on offsite strategy meetings as well as market visits to dealers in China, USA, and India. The above does not include the time devoted to board and budget meetings.

Why this note?

Ideally, a leader must not need to quote such data in defense. Yet, it is important to set the record straight since insinuations and leaks are being made explicitly to create an illusion that
Mr. Mistry was a "hands off" Chairman and TCS/JLR were on "auto-pilot" during his leadership.

While Tata Sons, under the leadership of Mr. Ratan Tata, is busy apportioning credit and blame for the performance of operating companies, Mr. Mistry wishes to place on record his appreciation for the hard work done by the leadership teams of those companies, who in Mr. Tata's opinion have shown less than stellar performance - the "hotspots". Full credit must go to the men and women who have tirelessly worked to turn around legacy issues and build a future that we can all be proud of.

One man's ego versus an institution

It is common knowledge that the decision to acquire Corus for over USD 12 billion, when only a year earlier it was available at less than half that price, was based on one man's ego and against the reservations of some board members and senior executives. The overpayment made it harder to invest in the acquired assets which had been neglected, and thereby, placed many jobs at risk.

Similarly, in November 2003, Mr. Tata, against the advice of many of his own team members, decided to back CDMA as the platform for the group's telecom business. This "strategic" decision has led to a series of consequences that currently leave the company structurally challenged. Once again, one person's judgment adversely affected the jobs of thousands.

When one talks about vision and near death experiences, it is worth recounting a little known fact. Midway during the TCS journey to date, Mr. F. C. Kohli was suffering from a cardiac condition. Mr. Ratan Tata was then heading Tata Industries' joint venture with IBM and approached Mr. JRD Tata with a proposal from IBM to buyout TCS. Mr. JRD Tata refused to discuss the deal because Mr. F. C. Kohli was still recovering in the hospital from his setback. On his return, Mr. Kohli assured JRD that TCS had a bright future and the group should not sell the
company. JRD Tata turned down the offer, demonstrating true vision. But, it was also a near-death experience for TCS at the hands of Mr. Ratan Tata.

Office of Cyrus P. Mistry
November 22, 2016


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