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Business News/ Companies / News/  Tata Motors independent directors refuse to pick sides in Tata vs Cyrus Mistry fight
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Tata Motors independent directors refuse to pick sides in Tata vs Cyrus Mistry fight

Tata Motors independent directors say the management has their full support and confidence

Cyrus Mistry was on 24 October ousted as chairman of Tata Sons and replaced by Ratan Tata as interim chairman. Photo: PTIPremium
Cyrus Mistry was on 24 October ousted as chairman of Tata Sons and replaced by Ratan Tata as interim chairman. Photo: PTI

Mumbai: Independent directors at Tata Motors Ltd on Monday refused to take sides in the Ratan Tata-Cyrus Mistry spat, saying the auto maker’s board was collectively responsible for all decisions relating to strategy and operations.

“The independent directors have confirmed that all the decisions taken by the board with regard to the strategy, operations and business of the company have been unanimous and executed by the chairman and management accordingly," said a statement issued by independent directors after they met separately.

“The management of the company and its subsidiaries have the full confidence and support of the independent directors, " the statement added.

ALSO READ | Cyrus Mistry-Ratan Tata spat: A look at how the events unfolded

Mistry, who was ousted as chairman of group holding company Tata Sons Ltd and replaced by Ratan Tata as interim chairman on 24 October, is the chairman of the boards of several group operating firms.

Tata Motors’ 11-member board includes six independent directors. They are Nusli Wadia, Subodh Bhargava, V.K. Jairath, R.A. Mashelkar, Falguni Nayar and Nasser Munjee.

“The board has decided that it is better not to pinpoint individuals and come back to the basics; boards have collective responsibility and not individual responsibility," said J.N. Gupta, managing director and co-founder of Stakeholder Empowerment Services, a proxy advisory firm.

The statement issued by the Tata Motors independent directors is different from the ones issued by their counterparts on the boards of Indian Hotels Co. Ltd (IHCL) and Tata Chemicals Ltd. At IHCL, the statement specifically came out in support of Mistry; at Tata Chemicals, the independent directors “unanimously affirmed their confidence in the Board, its Chairman and the management".

ALSO READ | Tata Motors Q2 profits crimped by hedging losses in UK

“Unlike in the IHCL case, when Tata Sons were caught blindsided, in this case, they seem to have been prepared for it," said Shriram Subramanian, managing director of InGovern Research, another proxy advisory firm.

Wadia is also an independent director on the boards of Tata Steel and Tata Chemicals, while Munjee serves on the board of Tata Chemicals as well.

“It was not a trust vote against Cyrus or for him. It was a unanimous decision to repose faith in the management," said an independent director on condition of anonymity.

The board meeting of Tata Motors comes days after Tata Sons moved a resolution to eject Mistry and Wadia as directors in Tata Motors, Tata Steel and Tata Chemicals.

The role of independent directors has come into sharp focus in the three-week old Tata-Mistry spat. After the independent directors of IHCL and Tata Chemicals backed Mistry, Tata Sons asked independent directors to consider “the interest of all stakeholders" and ensure that “the future of Tata companies is protected".

The Tata Motors board accepting collective responsibility is important in the backdrop of allegations of corporate governance failure at the auto maker. In a 25 October email to the board of Tata Sons, Mistry named the passenger vehicle division of the company as a “legacy hotspot" and said that “emotional decisions alone" had prevented it from discontinuing the loss-making Nano model.

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Updated: 15 Nov 2016, 04:01 AM IST
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