Smaller Tata companies sparkled under Cyrus

Small- and mid-size companies where Cyrus was the chairman did better on bourses than large Tata group companies

The small and medium sized Tata Companies were the star performers during the Mistry's nearly 45-months tenure as Tata Sons chairman. Tata Steel subsidiary and pig-iron manufacturer Tata Metaliks tops the chart with 66.5% compounded annual growth rate (CAGR) in its market capitalisation during Mistry tenure at the helm of Tata Sons. The company's market capitalisation jumped nearly seven times during the period from Rs 158 crore at the end of 2012 to Rs 1068 crore on October 24, 2016 the day Cyrus was removed as Tata Sons chairman. This was largely due to a turnaround in the company finances and the investors betting the company's planned merger with Tata Steel and delisting from the bourses. (See adjoining table)

The company posted a net profit of Rs 122.8 crore in FY16 against a net loss of Rs 114 crore in FY13.

Cyrus Mistry took over the group chairman on December 28, 2012.

It was followed by Tata Elxsi, whose market cap was up 6 times under Cyrus watch growing at a CAGR of 60% during the period growing from Rs 718.4 crore at the end of December 2012 to Rs 4151 crore on Mistry last day at Bombay House. Company’s net profit was up nearly seven times during the period to Rs 155 crore in FY16 from Rs 21 crore in FY12, while its net sales was up 60% cumulatively during the period growing from Rs 611.2 crore in FY13 to Rs 1087 crore last fiscal.

Voltas was next on the league table with 42% CAGR growth in its market capitalisation during the period growing from Rs 3502 crore at the end of December 2012 to Rs 13,019 crore on Mistry last day in office. Voltas performance on the bourses was underpinned by a sharp improvement in its margins thanks to decline in raw material costs and a steady growth in its topline.

Tata Communications was a big outperformer with 32.1% CAGR growth in its market capitalisation during the Cyrus tenure at Bombay House. The company showed a steady growth in its topline and bottom line in the last three fiscal years.

Ironically, Cyrus Mistry was not chairman any of these companies and their board is chaired by other Tata Sons' directors. In all Cyrus Mistry was chairman of seven of the 26 listed group operating companies.

Among the companies where Cyrus Mistry is chairman, Indian Hotels tops the performance charts with 21.3% CAGR growth in market capitalisation during the period. It was followed by Tata Consultancy Services (19.1%) and Tata Motors (17.1%). Other outperformers during the period include Tata Chemicals (14%), Rallis (12.9 per cebt) and Trent (12.4%).

In comparison, Tata Power was the biggest laggard under Cyrus with 6.3% CAGR decline in its market capitalisation during the period. The company has been hit by losses at its Mundhra plant besides rising interest cost in its large borrowings.

It is followed by Tata Global beverages whose market capitalisation declined at CAGR of 1% a year during Cyrus tenure. The company's is under stress due to poor profitability of its European and North American operations, which together are bigger than its profitable domestic operations in terms of revenues.

Tata Steel is next on the chart with a stagnant market capitalisation during the period. Other under performers include Oriental Hotels, TRF and Titan Company.

Not surprising Cyrus Mistry entire focus was on turning around the strugglers and leaving out-performers untouched.

In line with this thinking, groups companies such as Tata Power, Indian Hotels, Tata Communications, Tata Chemicals and Tata Steel have sold their non-core and loss-making units and used the proceeds to muscle-up their balance sheet.

Companies where Cyrus Mistry was Chairman		Other Tata Group Companies
	MKt Cap Growth*		Mkt Cap Growth*
Company	CAGR (%)	Company	CAGR (%)
Indian Hotels	21.3	Tata Metaliks	66.5
TCS	19.1	Tata Elxsi	59.6
Tata Motors	17.1	Voltas	41.9
Tata Chemicals	14.0	Tata Communications	32.1
Tata Steel	-0.1	Automobile Corp of Goa	29.5
Tata Global Beverages	-1.0	Tata Sponge Iron	21.3
Tata Power	-6.3	Benares Hotels	18.4
		NELCO	17.5
		Tinplate	15.8
		Rallis	12.9
		Trent	12.4
		Automotive Stampings	9.0
		Tata Investment Corpn	8.1
		Titan Company	7.9
		TRF	6.7
		Oriental Hotels	5.2
		Tata Coffee	-1.1
		Tayo Rolls	-3.5
		Tata Tele(Mah)	-8.7
* Compounded annual growth in market caputalisation between December 31, 2012 and October 2016