New | Turmoil erupts in Tata as India’s biggest group removes chairman

Tata Group abruptly ousted its chairman of almost four years in a rare display of discord atop India’s biggest conglomerate, casting the spectre of a leadership vacuum at the US$100 billion coffee-to-steel business empire.

Chairman Cyrus Mistry, 48, was replaced by his 78-year-old predecessor at a board meeting on Monday, the group’s holding company said in a statement. Ratan Tata, a scion of the founding family, will serve as the interim chief and take part in the search for a more permanent successor, according to the statement from Tata Sons Ltd.

The move signals the end of Mistry’s push to transform Tata Group into a more prudent enterprise than the globetrotter that bought Jaguar Land Rover and steelmaker Corus Group Plc under Ratan Tata. In recent years, the Indian conglomerate refinanced loans and sold assets to help tackle debt levels that had bloated to more than $30 billion.

“This is just too bizarre that the chairman of the biggest industrial group in the country has been removed in such an arbitrary manner,” Gaurang Shah, vice president at Geojit BNP Paribas Financial Services Ltd. in Mumbai, said by phone. “The Tata Group owes an explanation as to why such a sudden decision has been taken. There will be some knee-jerk reaction on the stock prices of Tata Group companies.”

A spokeswoman for Tata Sons declined to comment beyond the company’s two-paragraph statement. Ratan Tata didn’t respond to an e-mail seeking comment. Attempts to reach Mistry weren’t successful.

Tata Motors Ltd. rose in New York trading, while Tata Steel Ltd. fell in London. The announcement came after the close of trading in India, where most of Tata’s units are listed.