Organizational Behaviour

POWER AND POLITICS CASE STUDY

MFM-I

SUBMITTED TO: SUBMITTED BY:

The jury Apoorva Char
Athira Madhu
Diksha Gaba
Eshetu Shanko
Hema Das

DECEMBER 14, 2017

NATIONAL INSTITUE OF FASHION TECHNOLOGY
BENGALURU
 WHEN THE TAIL WAGS THE DOG
(Power and Politics case study)
It was the last thing that Prem Chopra, executive vice chairman, Poornima Ltd., had expected to
see as he walked into his office in the morning and pushed open the door of his well-furnished
cabin. Thick fumes of cigarette smoke had enveloped the room. Settled comfortably on the
luxurious sofa at the center were four men. Each had a steaming mug in his hand. Chopra was
quick to notice that his personal coffee percolator had been switched on, his cigarette case had
been opened and lighter carelessly thrown on his desk. His secretary had told him as he came in
that he had visitors waiting for him but Chopra had not reckoned with his invasion of privacy.
"What is happening? He asked, outraged. And looking at one of them, he added Mr. Vikram
Talwar, you are supposed to be here much later for the management committee meeting at 12.30.
And only the managing directors of subsidiaries were expected to attend. What are these guys
doing here?
Cast at last in a role that he dreamt of playing for years, Talwar was in an expansive mood. He
rose to his full six feet and jabbing a finger at Chopra, said, "Sit down and relax. We need to talk,"
The intimidating tone caught Chopra off guard. He had a premonition that he was losing control
on his own turf.
Seven years ago, it was Chopra who had held all the cards. In transferring Talwar out of the head
office at Calcutta to Motors India Ltd., the company's fully owned subsidiary based in Bombay,
as its managing director, Chopra had executed what everyone thought was a smart move, The
grapevine at the time had it that the executive vice chairman, who carried a certain mystique in
company portals as a master of corporate intrigue, had killed two birds with one stone.
First, in moving Talwar out of Calcutta, Chopra was getting him out of his sight. As President
(Corporate planning). Talwar had been reporting to Chopra for over a year at the head office and
it was well known that the two had not been Seeing Eye to eye on a number of policy matters.
Talwar believed, for instance, that growth should be achieved through consolidating Poornima's
core competencies while Chopra favored diversification as a route to higher growth.
Second, Chopra was also putting Talwar on a flight to nowhere. Motors India Ltd., had been in the
red for the last four years during which it had become the graveyard of two successive CEO's who
had come with impeccable track records. Although Chopra had an intuitive feeling that Talwar
could succeed where others had failed, he reckoned that if he too tripped, he would be out of his
hair forever; but if he gave Motors India a kick start, Chopra would get his share of the encore.
Many of his colleagues at the head office felt that in accepting the transfer, Talwar had signed his
own warrant and that it would not be long before he faded away.
Poornima was a holding company, which had three fully owned subsidiaries dealing with
switchgears, transformers and motors respectively. Each was headed by a managing director
reporting to the executive Vice Chairman who in turn was responsible to the board headed by
Vallabh Mishra, an institutional nominee. Each subsidiary was an autonomous profit centre with
its own manufacturing and marketing facilities. The group had been promoted two decades ago by

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Chopra who together with his friends and associates held the controlling stake in Poornima to the
extent of 26 percent of the capital. While the banks and financial institutions owned 14 percent,
the rest was widely distributed across a large body of small investors. Over the years, the
shareholders had benefited from regular dividends and appreciation in the value of Poornima stock.
The group had built up technical expertise in each of its businesses and enjoyed a reputation for
customer orientation. Poornima had a group turnover of Rs.400 crore last year. While Motors India
has been bleeding of late, the other two subsidiaries had been regularly posting healthy annual
profits.
To everyone's surprise, Talwar had engineered a turnaround of Motors India in a little over a year.
His main strength was his extraordinary ability to motivate individuals through focusing on their
strengths. Talwar had put together a team from the existing cadre and used it as an instrument of
change. It took 15 months for the subsidiary to record a marginal profit and by the end of the
second year, it had turned towards the growth path and contributed Rs.20 crore to Poornima's
overall profits of Rs.50 crore. Motors India generated the highest profits among all subsidiaries by
the fifth year.

The pace had been maintained for the next two years in a row.
It was during the third year that the hostility between Chopra and Talwar, which had cooled off
once the latter moved to Bombay, intensified. Chopra had used profits generated from Motors
India to fund a series of acquisitions by the holding company into unrelated areas of office
automation and software development. Repeated requests from Talwar to retain earnings and
plough them back into Motors India were of no avail. When the diversification attempts proved
disastrous and Chopra was under pressure from some board members (including Chairman) of
Poomima to divest, Talwar once again insisted on funds being retained at Motors India. It fell on
deaf ears. The old ghost of differences over policy had been surfacing at each monthly meeting at
the head office in Calcutta.
"Let me come straight to the point, Mr. Chopra." Said Talwar. "You know these three gentlemen
of course. They are part of my core management team at Motors India. We are here to make you
an offer. You have the management committee meeting scheduled in about three hours from now
and the meeting of the Poornima board later in the evening. So listen carefully. From where you
are seated, you have two options. One, sell of motors India to a group consisting of the four of our
friends and us here. It will enable you to use the proceeds freely to fund your diversification. We
have the financing and the paperwork ready and we can have the deal by the end of the week"
You must be out of your mind," blurted Chopra. "Motors India is a cash cow. I would be crazy
to sell it out. There is no way it can happen.
All right you have a choice. Surrender your controlling stake in the holding company, said
Talwar. "A couple of investors who are our supporters have been individually buying up
Poormima's shares for the past few days. As of yesterday evening, the total shares purchased by
them add up to 10 percent of Poornima capital. If the first option of sale of Motors India is still not

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acceptable to you, the word will be out. The individual investors will officially declare themselves
as a group with a common intent and set the ball rolling to acquire the controlling stake at
Poornima.
Chopra was taken aback. "You can't be serious," he said.

"I have never been more serious," said Talwar. "But of course, you can have minority stakes as
long as we have the management. After all, it can't be denied that you have built up this company.
The telephone rang. Chaiman Mishra was on the line. I thought it is only fair to inform you,
Prem, said Mishra, that yesterday the consortium has received letters from five individuals
expressing their interest to buy the institutional stake in Poornima, should the consortium decide
to off-load its holding. Of course, the very idea is absurd since institutional holding can't be
unloaded in small lots. We are ignoring the letters as of now but I pushed some buttons later in the
day and found out that all the five are acting in consort out that all the five are acting in consort.
Once they declare themselves as a group with a common interest and approach us again, the
institutions will have to respond to their offer. I also heard they are putting up Talwar for
management. I know you two have had differences. I am also aware that he is doing a great job at
Motors India. I hope the consortium will not be pushed into taking a position. Let us discuss the
matter in the evening at the board."
"I will check on this," said Chopra, "and call you later." "As I was saying, Mr. Chopra," said Talwar
getting ready to leave accompanied by his colleagues, "you have two options. Sell the subsidiary
or sell your stake in the holding company. The choice is yours. Have a nice day.
Questions
1) Do you think Chopra has misused power when he killed two birds with one stone? If yes, how?
2) Do you think Talwar has played politics? If yes, how?
3) Delineate the role of power and politics in this case.

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