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

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

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

“This is just too bizarre that the chairman of the biggest industrial group in
the country has been removed in such an arbitrary manner. 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,” Gaurang Shah, vice president at Geojit BNP Paribas Financial Services Ltd. in Mumbai, told the media.

Beyond the company’s two-paragraph statement, a spokeswoman for Tata Sons declined to comment. Ratan Tata didn’t respond to any of the e-mails sent by the media seeking his comment. Attempts to reach Mistry weren’t successful.

While Tata Steel Ltd. fell in London, Tata Motors Ltd. rose in New York trading. Most of Tata’s units are listed in India and the announcement came after the close of trading in that country.

With a combined capitalization of more than $100 billion and founded in 1868, the group is an Indian giant that employs more than 660,000 people and has 29 listed units. India’s largest company by market value and the group’s biggest unit is Tata Consultancy Services Ltd.

According to the statement, to find a new chairman within four months, Tata Sons created a panel comprising of Ratan Tata, Venu Srinivasan, Amit Chandra, Ronen Sen and Kumar Bhattacharyya back at the closely held holding company.

According to people with knowledge of the matter, Tata Sons also plans to disband Mistry’s Group Executive Council.

Tata Trusts is the principal shareholder of Tata Sons’ and a trust spokesman who asked not to be identified said that the board made the leadership change after getting a recommendation to do so form Tata Trusts. Mistry will continue to be a director at individual group units, he said.

“This is just too shocking,” said G. Chokkalingam, managing director at Mumbai-based Equinomics Research & Advisory Pvt. “The Tata Group is going through a lot of problems and most of it was either inherited, such as Tata Steel or Tata Motors, or due to adverse economic conditions like the IT business. It is very difficult to attribute it to leadership. Therefore it is shocking.”

(Adapted from Bloomberg)