By Debiprasad Nayak and Santanu Choudhury 

MUMBAI--Tata Group, one of India's largest conglomerates, abruptly removed its chairman Monday, replacing him temporarily with his predecessor, a member of the company's founding family.

Tata Group spans dozens of businesses, from salt to software, with collective revenue of more than $100 billion. Among the group's holdings: U.K.-based Jaguar Land Rover Automotive PLC and Tetley Tea.

In a move that surprised analysts and investors, the board of the group's holding company, Tata Sons Ltd., ousted Chairman Cyrus Mistry saying it was acting "for the long-term interest" of the company.

Mr. Mistry will continue to be a director on the board of Tata Sons, a Tata spokeswoman said.

Mr. Mistry couldn't be reached and a call to Shapoorji Pallonji & Co., the construction company of his father which owns 18% of Tata Sons, went unanswered after business hours on Monday.

Former head of Tata Group, Ratan Tata, one of India's best-known businessmen and philanthropists, is to serve as interim chairman for four months while a selection committee chooses a successor. The company said the CEOs of the group's many operating companies weren't changing.

Aside from a terse statement announcing the change, the company had little to say about the sudden shift.

"It's actually stunning," said Ramesh Damani, a member of BSE, a Mumbai-based stock exchange. "This doesn't happen at Tata."

Mr. Damani said the fact that no reason was given for Mr. Mistry's departure would make investors nervous.

Mr. Tata, known for strict ethics despite India's at-times murky standards of corporate governance, stepped down as chairman in 2012, but remained an adviser.

Mr. Mistry, the son of construction baron Pallonji Mistry whose firm is the largest shareholder in Tata Sons, took the helm of the group and has led it through some volatile times. Some businesses have thrived and others have struggled. Tata Steel in particular, has suffered amid a global glut and is trying to sell plants in the U.K. that it acquired in 2007.

Mr. Tata is known for boldly expanding Tata into foreign markets through multibillion-dollar acquisitions of U.K. steelmaker Corus Group as well as Jaguar and Land Rover brands. Mr. Tata also backed Tata Motors' push to build the world's cheapest car, the Nano, which got a lot of attention around the world for its less than $2,500 sticker price but didn't sell as well as many analysts had anticipated.

Mr. Mistry, a Mumbai native, studied civil engineering at Imperial College London and management at London Business School before going full-time into Shapoorji Pallonji, the family construction business.

Like Mr. Tata, the younger Mr. Mistry hails from the close-knit Parsi community--descendants of refugees from Persia who sought asylum in India centuries ago. He is an Irish national by virtue of his father's marriage to an Irish woman. Though he doesn't bear the Tata surname, he is linked to the family through his sister's marriage to Ratan Tata's half-brother Noel Tata, who was once considered a contender for the chairman's post.

At the time of his appointment, some analysts said they were concerned that Mr. Mistry might struggle to manage and revamp such a sprawling conglomerate. Analysts said he had been trying to streamline the group to focus on few good businesses which could have ruffled some feathers within the 148 year old group.

Investors said they were waiting for more details about the rationale behind the removal of Mr. Mistry, whether he and his family plan to fight it and who might eventually replace him.

"We need some information to understand the underlying motive for the move," said Jonathan Schiessl, chief investment officer at Ashburton Investments, which manages around $10 billion, some of which is invested in Tata Motors.

Shefali Anand in Mumbai and Preetika Rana in New Delhi contributed to this article.

Write to Debiprasad Nayak at debi.nayak@wsj.com and Santanu Choudhury at santanu.choudhury@wsj.com

 

(END) Dow Jones Newswires

October 24, 2016 11:15 ET (15:15 GMT)

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