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Business News/ Companies / News/  Cyrus Mistry’s business plans had defects: Tata Sons
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Cyrus Mistry’s business plans had defects: Tata Sons

Tata Sons says Cyrus Mistry did not take meaningful steps to enter new growth businesses, denies there was excessive interference from Tata Trusts

Separately, the affidavit alleged that it took Cyrus Mistry almost two years after his appointment as chairman in December 2012 to address a conflict of interest. Photo: Indranil Bhoumik/MintPremium
Separately, the affidavit alleged that it took Cyrus Mistry almost two years after his appointment as chairman in December 2012 to address a conflict of interest. Photo: Indranil Bhoumik/Mint

Mumbai: Cyrus Mistry was slow to act on problems and his business and strategic plans lacked specifics, said an affidavit filed by Tata Sons Ltd in response to a petition filed by the family investment firms of its ousted chairman.

The affidavit said that Mistry did not take any meaningful steps to enter new growth businesses, and denied that there was excessive interference from Tata Trusts, the biggest shareholder in Tata Sons.

“Tata Sons denies that there were no performance reasons justifying removal and that Mr Mistry’s continuance as Chairman would be in the interest of all stakeholders," the affidavit, which runs into 205 pages, said.

ALSO READ | Tata Sons wants NCLT to cancel case filed by Cyrus Mistry’s family firms

Tata Sons removed Mistry as chairman of the $103 billion group on 24 October in a boardroom putsch. Since then, the two sides have been locked in a bitter feud. On 20 December, a day after Mistry’s resignation from the boards of operating companies, Mistry’s family investment firms—Cyrus Investments Pvt. Ltd and Sterling Investments Corp. Pvt. Ltd—filed a petition in the National Company Law Tribunal (NCLT) alleging mismanagement and oppression of minority shareholders of Tata Sons and seeking the ouster of the current management of Tata Sons and Tata Trusts.

The business and strategic plans presented by Mistry in June 2015 and September 2016 respectively, lacked the “specificity one would expect of a robust plan," Tata Sons said in its affidavit.

Progress on pursuing new businesses opportunities and rationalization and consolidation of existing ones was slow. The plan he had proposed lacked concrete implementation steps or milestones, it said calling the plans “aspirational without substance".

Citing an instance of Tata Tele Services Ltd, it said that as opposed to being decisive and taking a write-down or reducing the debt burden, Mistry kept optimistically holding out for a merger that might save the business, resulting in huge losses. “The pace of progress Mistry made was much slower than one would expect from a decisive, high performing leader," the affidavit said.

ALSO READ | Cyrus Mistry didn’t keep family business at a distance, says Ratan Tata

Separately, the affidavit alleged that it took Mistry almost two years after his appointment as chairman in December 2012 to address a conflict of interest arising from his position at the Tata group and his family’s Shapoorji Pallonji Group.

A person close to Mistry had earlier told Mint that the ousted chairman had written to Tata group companies that no contracts were to be awarded to Shapoorji Pallonji group by October 2013.

The affidavit denied that the removal of Mistry was illegal and constituted oppression of the petitioner. Refuting Mistry’s accusation of excessive interference by Tata Trusts, the affidavit said, “there is no conflict of interest in the Trustees discharging their fiduciary duties and the Trust nominee directors discharging their fiduciary duties as directors of Tata Sons".

The affidavit pointed out that Mistry had never highlighted to the board that there was an ongoing ‘mismanagement’ of Tata Sons that he was seeking to rectify or that the petitioners were being ‘oppressed’.

“Cyrus Mistry should explain as to why he did not raise this issue any time in the past and rose from slumber to voice this grievance after he was replaced as the executive chairman of Tata Sons," the affidavit said.

ALSO READ | Ratan Tata personally asked Cyrus Mistry to resign before ouster

“One has to clearly differentiate between business decisions and the alleged break down in governance," said Shriram Subramanian, managing director at proxy advisory firm InGovern Research. “The NCLT will pass judgement based on the merit of each point that has substantiated by evidence."

The Mistry camp said it is not surprised by the Tata allegations.

“It is but natural that Tata Sons and its directors and the trustees of Tata Trusts would deny allegations and level counter-allegations," said a person close to Mistry. “Since the matter is before a judicial tribunal, there is no question of participating in a trial outside the tribunal. A full and fitting reply will be filed within applicable deadlines. It is unfortunate, although not surprising, that the replies of the respondents seem to be widely circulating in the media. This is consistent with expectation set by the conduct of the team since October 24, 2016."

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Published: 10 Jan 2017, 12:29 AM IST
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