Home / Companies / News /  Nusli Wadia shifts focus to ‘lapses’ at Tata Chemicals

Mumbai: Nusli Wadia, who has emerged as the staunchest supporter of ousted Tata Sons Ltd chairman Cyrus Mistry, has written to the shareholders of Tata Chemicals, alleging serious corporate governance lapses at the company.

Wadia’s letter is similar in tone and substance to the letters he has written in recent days to the shareholders of Tata Motors and Tata Steel. He is an independent director on the board of all three companies.

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Wadia, a long-time shareholder in several Tata companies and chairman of Bombay Dyeing and Manufacturing Co. Ltd, has alleged in the letter that ahead of Tata Chemicals’ 10 November board meeting, its managing director R. Mukundan held a meeting of senior management and asked them to sign a pre-drafted letter seeking to endorse the stand of Tata Sons.

“Those present were advised that if they did so, their interests would be protected by Tata Sons... These are the acts by which Tata Sons sought to coerce and influence the directors through the management," the letter said.

On 10 November, independent directors of Tata Chemicals issued a statement affirming their confidence in board chairman Mistry, who was removed as chairman of holding company Tata Sons in a boardroom putsch on 24 October.

ALSO READ | What does Cyrus Mistry gain by trashing the Tata group?

Since then, the Tata and Mistry camps have levelled allegations against each other; Mistry has dug in his heels and refused to resign from operating companies; and Tata Sons has been forced to call shareholders’ meetings of the companies to remove him.

Earlier this week, in one such meeting, he was removed as chairman of Tata Consultancy Services.

Tata Sons has also sought to remove Wadia from the board of Tata Chemicals, Tata Motors and Tata Steel by way of a series of extraordinary general meetings (EGMs) whose main purpose is to remove Mistry as director and chairman of these firms. The meetings are scheduled for next week.

“I am the only independent director of your company whose removal is being sought despite the fact that the statement to the stock exchanges (supporting Mistry) was approved unanimously and sent by all independent directors," Wadia wrote. In his letter to shareholders, Wadia said that at the board meeting, which followed the meeting of independent directors on 10 November, Mukundan conveyed that in the event the independent directors chose to issue any statement which made a reference to Mistry, he would not permit the company secretary to issue the proposed communication.

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This, Wadia said, is a serious cause for concern on the lack of corporate governance in the conduct of the affairs of the company resulting from the undue interference by the dominant promoter.

The 10 November board meeting saw non-independent and non-executive director Bhaskar Bhat read out a handwritten statement proposing that Mistry not chair the meeting, Wadia said. Bhat resigned the same night after the remaining directors present did not support the proposition. In his letter, Wadia questioned whether the reappointment of Bhat six days after his resignation was good and “appropriate governance or a farce".

Wadia claimed that the cross-holdings of Tata Chemicals in other Tata companies are being maintained to indirectly keep the voting rights and control in Tata Sons. These large cross-holdings are in various Tata companies, including unlisted ones.

“If these holdings were to be disposed of, your company would be debt-free. These cross-holdings are being maintained in a debt-ridden company only to indirectly keep the voting rights and control in Tata Sons," Wadia wrote.

He said the consolidated debt of Tata Chemicals has risen to Rs8,695 crore from Rs1,827 crore over the past 10 years mainly due to various acquisitions.

Wadia, who has been an independent director on the board of Tata Chemicals for 35 years, said he has disagreed with several proposals during the time of Tata’s chairmanship up to 2012, including the proposal in 2003 for merger of Haldia plant with the company, involving an investment of Rs347 crore.

Wadia said he had warned of possible future losses from the merged entity. He and other board members had also expressed “serious apprehensions" on the proposal for the Rs800 crore acquisition of the Brunner Mond Group, he wrote.

Mint reported on Thursday that Tata Sons had sought legal opinion on the rights and obligations of independent directors after the board meetings of two of its listed units—Indian Hotels Co. Ltd and Tata Chemicals —where independent directors decided to publicly express their support for Mistry.

“We have received the official representation from Mr. Nusli Wadia that is under review. We would not like to comment about the company’s board meetings unless the happenings are material and germane to issues at hand, in which case we will issue clarifications as is appropriate. As always, all our employees and our leadership team are proud and privileged to be a part of Tata Chemicals and the Tata ethos of serving the communities for the greater good," a statement from Tata Chemicals said.

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