After Cyrus Mistry, Who? After Nasty Exit, Candidates Will Be Wary

New Delhi: The Tatas may have ousted their Chairman in a boardroom coup, but the manner of his removal, and the bitter spat it has triggered which includes allegations of financial impropriety has raised questions about what it will take to identify a successor.

Cyrus Mistry was sacked on Monday and succeeded by Ratan Tata, whom he had replaced in 2012. Mr Tata will serve as Chairman for four months, during which time a permanent replacement is to be identified.

Throughout Mr Mistry's tenure, Mr Tata remained chairman of the two Tata Trusts that are the largest stakeholders in the group, leading to allegations of multiple centres of power.

"I am not yet clear in my own head that what is the nature of the relationship between Tata Trust and Tata Sons, in the event that there is a difference of views, and in the event the two chairmen are two different people," said Vikram Mehta, the former CEO OF Shell, and currently the Chairman of Brookings India.  

"Someone who is looking to take over this job will most certainly want clarity on that relationship," he said.

In an email replete with allegations of corporate misgovernance by the Tatas, interference by the group's patriarch, and a resolute indifference to accumulating losses, Mr Mistry has stated that the process by which he was ousted is marked by "illegality and invalidity." His office has said that "at this stage," he does not plan to go to court against his removal

He has also underscored the group's far-reaching financial  troubles, particularly in five areas he refers to as "legacy hotspots", which he claims could affect the conglomerate's value by 18 billion dollars.

Tata Sons refuted his claims today in a statement that says Mr Mistry, as a member of the board for over a decade, was party to many of the decisions he now declares unsound, and described his attempt to "besmirch" the group as "unforgivable."

But Mr Mistry's email, sent to the board the day after it removed him, has prompted inquiries by the stock exchanges from listed Tata companies; the market regulator SEBI too is said to be taking note.

Gurcharan Das, a prominent commentator, told NDTV, "I would advise him (Ratan Tata) and I would advice India Inc that the job of a leader is to groom a successor. In great companies, when the leader leaves, there are at least 3-5 people who are ready to step in his shoes. All of us need to go back and prepare talent in that way."

Even last time, without these controversies, the search for Ratan Tata's successor proved to be a challenge. The search committee finally had to look inwards, settling on Mr Mistry who was a part of the search panel itself. He had to recuse himself when he became the lead contender.  

"Any candidate that is now in the race or is considered, will pull up and refer to the letter from Cyrus Mistry," said Suresh Raina, managing partner with Hunt Partners, an executive search firm, to news agency Reuters.