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Mumbai: Ratan Tata has met key investors, as well as the bosses of Tata group companies, and he has written twice to employees after taking over as interim chairman of Tata Sons Ltd following the ouster of Cyrus Mistry. But the one group that Tata seems to have left out of his outreach plan is independent directors on the boards of group firms. 

At least five independent directors Mint spoke to said they haven’t received any communication from Tata Sons explaining why Mistry was ousted on 24 October. These directors, who spoke on condition of anonymity, serve on the boards of four listed Tata firms. 

The role of independent directors has come into focus after the group serving in Indian Hotels Co. Ltd unanimously reposed confidence in Mistry as chairman of the hotel chain on Friday and felt a need to air this view. Now, as the boards of a clutch of Tata group firms meet to discuss quarterly earnings, the question is whether other directors will be influenced by the board of Indian Hotels.

ALSO READ | Cyrus Mistry gets Indian Hotels boost as Tata revamps management

“Whatever is required to be done, will be done," said a Tata group spokesperson when asked if the group plans to expand its outreach. 

Three of the five independent directors cited above were tight-lipped about the way they will vote if the question of removing Mistry as chairman of their companies comes up.

“We too are groping in the dark," said one independent director when asked about Mistry’s ouster. 

A senior Tata group official said that too much shouldn’t be read into the Indian Hotels board move. “I hope other group companies will appreciate that this kind of move will neither be in their interest nor in the interest of the group," he said on condition of anonymity. “One of the biggest contributions of Mr (Ratan) Tata has been to hold the company as a cohesive group. With individual companies adopting this kind of approach, the cohesiveness can be impacted, undermining the power of the Tata group as a whole." 

The developments at Indian Hotels indicate that similar conflicts between the promoter shareholder and the boards of other Tata group companies cannot be ruled out.

ALSO READ | Cyrus Mistry is unlikely to go quickly or quietly

That is also evident from the fact that Keki B. Dadiseth—a trustee on two of the Tata Trusts, which owns two-thirds of Tata Sons, and an independent director on the Indian Hotels board—also voted to retain Mistry.

Dadiseth could not be reached immediately for comments. Calls to his office on Saturday were not answered. 

The key to victory for either side, said J.N. Gupta, managing director at Stakeholder Empowerment Services, lies in the voting decision of institutional investors such as government-owned Life Insurance Corp. of India, which owns 13.62% of Tata Steel Ltd. 

Amit Tandon, founder of proxy advisory firm Institutional Investor Advisory Services, said minority shareholders will play a key role. 

“If the minority shareholders are indeed asked at some stage to vote on the matter, Tata Sons will have to back their claim with a lot more information and data on reasons which culminated in Mistry’s sacking. They just can’t say ‘Trust me’."

Typically, shareholder approval is needed to sack directors; a board which elects chairmen can replace them too. 

A second Tata group official, who also spoke on condition of anonymity, conceded that the conglomerate needs to engage a lot more deeply with stakeholders. 

“Mistry's replacement is not about the acquisition of a particular company or a divestment decision. It’s about Tata as an institution. This reason has not been adequately explained to the stakeholders," he said.

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

Gopika Gopakumar contributed to this story.

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