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Business News/ Companies / Cyrus Mistry gets Indian Hotels boost as Tata revamps management
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Cyrus Mistry gets Indian Hotels boost as Tata revamps management

Indian Hotels's independent directors express support for Tata Sons's ousted chairman Cyrus Mistry

Cyrus Mistry has been the non-executive chairman of Indian Hotels since 2012. Photo: PTIPremium
Cyrus Mistry has been the non-executive chairman of Indian Hotels since 2012. Photo: PTI

Mumbai: Independent directors of Indian Hotels Co. Ltd (IHCL), the Tata group entity that runs the Taj hotels, have reposed confidence in Cyrus Mistry in a snub to the board of Tata Sons Ltd and, indirectly, to Ratan Tata, who became interim chairman of the holding company after Mistry’s 24 October ouster.

Their statement of confidence in Mistry came on a day Tata Sons announced a slew of organization changes seen as an attempt by Ratan Tata to build a team of trusted loyalists before a new chairman is selected.

“Taking into account board assessment and performance evaluations carried out over the years, the independent directors unanimously expressed their full confidence in the chairman Cyrus Mistry and praised the steps taken by him in providing strategic direction and leadership to the company," Indian Hotels said in a statement on Friday after the second-quarter earnings announcement.

ALSO READ | Cyrus Mistry won’t resign as chairman of Tata group companies

Since Indian Hotels is a listed company, the independent directors felt it was imperative to state their views to investors and the public at large so that they can make an informed decision, the statement added.

The independent directors met on Friday just before the company’s board meeting to discuss the results. The 10-member board (including Mistry) of Indian Hotels includes six independent directors: K.B. Dadiseth, Ireena Vittal, Vibha Paul Rishi, Deepak Parekh, Nadir Godrej and Gautam Banerjee.

The thumbs-up is a confidence booster for Mistry, whose board position in various group companies has been uncertain following his ouster from the helm of Tata Sons. It is also seen as a rebuke to the holding company and his predecessor Ratan Tata, if only implicitly.

“We are completely shocked at the manner in which this (ouster) happened. The process of cleaning up was already going on and Cyrus was doing a good job," said one of the independent directors on condition of anonymity. “There was no communication from Tata Sons."

ALSO READ | Ratan Tata moves fast to repair Tata group’s tarnished name

It is rather unusual for independent directors to assert themselves in such fashion, experts at proxy advisory firms said. It may set a precedent for other Tata group companies where Tata Sons doesn’t have a controlling stake and Mistry is still chairman and non-executive director. Mint reported on Friday, citing a person close to Mistry, that he has no intention of stepping down from group companies, indicating that he is digging his heels in for a long fight.

Meanwhile, Tata Sons unveiled organizational changes, appointing S. Padmanabhan, a Tata veteran of 32 years, as the group human resources head in addition to his role as leader of the Tata Business Excellence Group.

Another veteran, Mukund Rajan, will continue to be responsible for ethics and sustainability and will take additional responsibility of overseeing the operations of the overseas representative offices of Tata Sons in the US, Singapore, Dubai and China.

ALSO READ | The fig leaf of corporate governance

Harish Bhat, in addition to overseeing marketing and ‘customer-centricity’, will henceforth also manage the Tata brand. He will oversee strategy and business development. Gopichand Katragadda will continue to be the group chief technology officer and Sanjay Singh will oversee the public affairs function out of the Delhi office.

Nirmalya Kumar, N.S. Rajan and Madhu Kannan have left the services of the company, Tata Sons said. The three, who have decided to explore options outside Tata Sons, were part of the five-member group executive council (GEC) formed by Mistry. The GEC was disbanded on 24 October after the removal of Mistry. Bhat and Rajan were also part of the GEC.

“By appointing someone like Padmanabhan as group HR head ahead of the appointment of the new chairman, Ratan Tata is bringing the old trusted hands back in the system. In a way he is preparing his ground before the new person takes charge at the helm," said a top official at an executive search firm. He declined to be identified.

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Published: 04 Nov 2016, 07:23 PM IST
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