The Tata-Mistry boardroom fight is like a bout of boxing. After every knockout, the opponent gets up, clarifies and then the next bout comes in the form of a fresh salvo from either Ratan Tata's camp or Mistry's.
Today, Tata Group took centrestage first by announcing that Tata Consultancy Services has appointed the 69-year old Ishaat Hussain as its interim chairman. He will replace current chairman and ousted chief of Tata Sons, Cyrus Mistry, who continues to hold key posts in several Tata group companies.
In a release issued to the BSE, TCS said, "Mistry has ceased to be the chairman of board of directors of the company and Hussain is the new chairman of the company."
The company has been further informed that Hussain shall hold office as chairman until a new chairman is appointed in his place, the release added.
Later in the day, in a nine-page statement issued to media, Tata Group accused the sacked Tata Sons' chairman Cyrus Mistry of putting the group in doldrums and attempting to wrest control of the firm.
Not taking things in his stride, Mistry's office shot back saying that Tata's letter showed "unsubstantiated claims and half truths without a word of explanation as to why it became necessary to remove him summarily violating natural justice and without explanation."
On being removed as chairman of TCS, Mistry said, " To remove TCS from the data contending that “Mr Mistry does not really contribute materially to TCS” and to blame him for all problems inherited by him such as Tata Motor’s passenger vehicle business in India is inherently fallacious to any unbiased observer."
The hasty actions appear to have been done at night. The stock exchange announcement at 8 am. Cloak and dagger machinations with little regard to due process of law has come to define the angry strategy of the Ratan Tata camp. On 24 October, Mistry was replaced by Ratan Tata (at a board meeting without notice of the replacement). Till date no reasons have been forthcoming - just vague statements about "culture" and "trust deficit".
In fact, it is the Tatas which had fired the first salvo late last month. In a surreptious move, the Tata Sons board ousted Cyrus Mistry from the board of Tata Sons and announced it late evening on October 24. Since then, the Tata Group - famed for its old world, genteel culture and for stalwarts like JRD Tata and Ratan Tata in the pre-Mistry era - has become like any other family holding firm. There are accusations and counter accusations with neither the 148 year old group or the Shapoorji Pallonji group scion Mistry calling a truce.
After Mistry's mail to the board on the unfairness of his dismissal, where he expressed shock and betrayal of corporate governance by the Tata Group, he levelled a series of allegations against Ratan Tata and contended that he was pushed in to a position of “lame duck” chairman and changes in decision making process created alternate power centres in Tata Group.
In an explosive confidential email to Tata Sons board members, he accused them of replacing him as Chairman of India’s largest conglomerate without a word of explanation and without giving him an opportunity of defending himself “in a summary manner” that must be unique in the annals of corporate history. He also said that he was pushed to become a 'lame duck' chairman' of the over $100 billion dollar group.
The Tatas have let select people in the group to level allegations in public against Mistry. For instance, Ronen Mistry said the mail sent to Tata Sons was 'mischievously leaked' in public by Mistry. Or letting V R Mehta, a trustee of the Sir Dorabji Tata Trust (the largest of the Tata Trusts), to talk in detail about the 'narrow' focus of the ousted 48 year-old Mistry.
In an interview to NDTV, Mehta, a trustee of the Sir Dorabji Tata Trust (the largest of the Tata Trusts) said that one of the reasons for sacking Mistry was the rapid shrinking of funds which are the mainstay of the Trusts. The money is then used for various charitable activities. Another reasons spelt out by Mehta was the 'narrow' focus of Mistry which constricted the group's finances.
In the recently held board meeting of Indian Hotels Company Ltd., independent directors of the board including HDFC chairman Deepak Parekh, former HUL chairman Keki Dadiseth, Godrej group’s Nadir Godrej and Ireena Vittal — met before the board meeting and decided to back Cyrus Mistry, making it tough for the Tatas to dislodge Mistry from the company. Tatas do not have a strong director as its nominee on the board.
Mistry today in a statement added that "to allege “ulterior motive” of taking over control of companies, giving the example of Indian Hotels only because independent directors, one of whom is also a director of Tata Trust, demonstrated true independence is not in keeping with Tata governance standards."
Published Date: Nov 10, 2016 05:37 pm | Updated Date: Nov 10, 2016 05:37 pm