BackRatan Tata asks shareholders to back Mistry’s removal from group firms
Interim chairman Ratan Tata in a letter to shareholders says Tata Sons had lost confidence in Cyrus Mistry and his ability to lead the group
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Mumbai: Tata Sons Ltd interim chairman Ratan Tata on Wednesday asked shareholders of group companies for their support in removing Cyrus Mistry as director on their boards, saying Tata Sons had lost confidence in him and his ability to lead the group.
Tata said in a letter to shareholders that Mistry, who was removed as chairman of Tata Sons on 24 October, was offered “an opportunity to step down voluntarily from the chairman position, which he rejected". In his first communication with shareholders since Mistry’s ouster, Tata said the right step for Mistry would have been to resign as director from these firms.
Tata warned that Mistry’s continued presence as a director in group companies was a serious disruptive influence on their boards, which could make them “dysfunctional", more so because of Mistry’s “open hostility" towards Tata Sons, the group holding company.
ALSO READ | Cyrus Mistry’s office says he is fighting to protect Tata group
Six Tata group firms—Tata Consultancy Services Ltd (TCS), Indian Hotels Co. Ltd, Tata Steel Ltd, Tata Motors Ltd, Tata Chemicals Ltd, and Tata Power Co. Ltd—have called for extraordinary general meetings (EGMs) this month to seek Mistry’s removal as a director.
“We now seek your support of the resolution that Tata Sons has moved in the forthcoming extraordinary general meetings of our companies, for the removal of Mr Cyrus Mistry as director," Tata said in his letter to shareholders. “As you would expect, this deliberated action by the Tata Sons board was taken after the relationship with Mr Mistry steadily deteriorated, and several attempts to remediate went unheeded."
Tata vs Mistry: A look at how the events unfolded
A statement by Mistry’s office said that Tata had failed to offer any reason for his removal, and denied any prior attempt at remediation.
“The fait accompli presented to Mr Mistry was that he could leave or face a sacking at the (24 October) Board Meeting scheduled in the next 5 minutes," the statement said.
The letter from Tata, 78, came a day after Mistry’s office said he was fighting to protect the Tata group from “capricious decision-making" by the interim chairman.
Tata Sons has accused Mistry of concentrating all power and authority in his own hands as chairman of all the major Tata operating companies. Mistry has accused Tata Trusts, the biggest shareholder in Tata Sons, and the holding company of causing a “flagrant widespread" breakdown in governance.
On Monday, Mistry wrote a letter to shareholders highlighting how Tata and N.A. Soonawala, trustees of the Tata Trusts, took the veto rights of trust-nominated directors as an “entitlement to dictate to these directors how Tata Sons should conduct itself". These trustees tried to take indirect control by directly seeking information about individual Tata group firms, the letter alleged.
In Wednesday’s letter, Tata said that while TCS and Jaguar Land Rover, a unit of Tata Motors, had been successful businesses, others like Tata Steel Europe have been slow to be profitable. “Our approach has been to support and fund these businesses during their development and growth phases. We exit the business only when we believe it is unviable," he said.
Under Mistry, Tata Sons in March decided to put Tata Steel’s UK assets for sale. The group eventually halted the sale process in July in favour of discussions for a joint venture with “strategic players in the steel industry, including Thyssenkrupp AG".
In his letter, Tata also wrote that the group firms are supported by Tata Sons transparently—such as through licensed use of the Tata brand, through direct and indirect financial support, strategic advice and support for acquisitions or divestments.
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