Boards In Crisis

Can the fragile balance between promoters, boards, and management survive in the face of culture clashes and rampant ego?

- Ashish Gupta And Debabrata Das

FOR THOSE OF US WHO track India Inc. on a regular basis, October of last year will go down as perhaps the most eventful month since July 1991. In many ways, the events of a year ago ushered in a new, more disturbed, era for corporate India. On Oct. 24, 2016, Cyrus Mistry, then chairman of Tata Sons, was summarily sacked by the board. Much dirty linen was then washed in public (more on that later), and 12 months on, with a new chairman in place, Tata Sons is trying to get on with business as usual.

Even as things seemed to be stabilising somewhat at Bombay House, the iconic headquarters of the Tata group, there was trouble brewing down south in Bengaluru. Another stalwart of India Inc., Infosys, found itself in the limelight for far from pleasant reasons. Vishal Sikka, the CEO appointed three years ago to turn around the homegrown information technology giant, resigned. His reason: “false, baseless, malicious and increasingly personal attacks ... amplified by the very people from whom we all expected the most steadfast support”. Strong words, especially when it was made amply clear that the “people” he referred to was actually one person, the founder of Infosys, N.R. Narayana Murthy.

Two unrelated incidents at two vastly different organisations. But both being held up to scrutiny,and both, to some extent, found wanting. The Tata group has always been seen as one of those icons of modern business. And at Infosys, Murthy had garnered much praise for his uncompromising views on corporate governance. To find that such idols of corporate India have feet of clay threw much of the business community into disarray. And the fact that promoters could unceremoniously wrest control from management and the boards set off shock waves that are yet to subside.