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 per cent 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 (Rs 1.58 billion) at the end of 2012 to Rs 1,068 crore (Rs 10.68 billion) 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 (Rs 1.23 billion) in FY16 against a net loss of Rs 114 crore (Rs 1.14 billion) 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 per cent during the period growing from Rs 718.4 crore (Rs 7.18 billion) at the end of December 2012 to Rs 4,151 crore (Rs 41.51 billion) on Mistry's last day at Bombay House.

The company’s net profit was up nearly seven times during the period to Rs 155 crore (Rs 1.55 billion) in FY16 from Rs 21 crore (Rs 210 million) in FY12, while its net sales was up 60 per cent cumulatively during the period growing from Rs 611.2 crore (Rs 6.11 billion) in FY13 to Rs 1,087 crore (Rs 10.87 billion) last fiscal.

Voltas was next on the league table with 42 per cent CAGR growth in its market capitalisation during the period growing from Rs 3,502 crore (Rs 35.02 billion) at the end of December 2012 to Rs 13,019 crore (Rs 130.19 billion) 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 per cent 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 per cent CAGR growth in market capitalisation during the period. It was followed by Tata Consultancy Services (19.1 per cent) and Tata Motors (17.1 per cent). Other outperformers during the period include Tata Chemicals (14 per cent), Rallis (12.9 per cebt) and Trent (12.4 per cent).

In comparison, Tata Power was the biggest laggard under Cyrus with 6.3 per cent 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 per cent 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.

Photograph: PTI Photo