By Aditi Shah and Abhirup Roy
MUMBAI India's Tata Motors (TAMO.NS), owner of British carmaker Jaguar Land Rover, posted a second-quarter net profit of 8.48 billion rupees ($125 million) on Monday but did not comment on the power struggle between its chairman Cyrus Mistry and Tata Sons.The company said only that its management had the "full confidence" of the board's six independent directors.Mistry is still the chairman of several key Tata companies including Tata Motors and Tata Steel (TISC.NS) after his ousting from the chairmanship of Tata Sons, the holding company of all the operating companies of the Tata group.The Tata group is now seeking to remove Mistry from Tata Motors, a battle that has also revived debate around India's corporate governance and Tata's complex structure.Tata Motors did not address the issue in a statement issued on Monday, however, noting simply that all decisions taken by the board of Tata Motors on strategy and operations have been "unanimous" and executed by the chairman and the management.The statement came on the same day the company posted its results for the three months ended Sept. 30. It made a consolidated net profit of 8.48 billion rupees, which compared with a net loss of 17.40 billion rupees in the same period last year, on total income from operations up 7 percent at 670 billion rupees.
"Tata Motors ... generates a substantial profit and revenues, so it is important for Tatas to have control over the board," said Shriram Subramanian, managing director of InGovern Research Services, a firm advising institutional investors.Tata Sons on Thursday removed Mistry as chairman of Tata Consultancy Services (TCS) (TCS.NS), 73 percent controlled by the group and the conglomerate's star performer. But it has struggled to get him out at other subsidiaries where ownership is closer to 30 percent.Boards at Tata Steel and Tata Chemicals voted to keep Mistry as chairman last week.
Directors of Tata Global Beverages (TAGL.NS), which co-owns and runs Starbucks (SBUX.O) coffee stores across India, meet on Tuesday.If the Tata Motors board does not oust Mistry, Tata Sons will have to turn to shareholder meetings. Tata Sons has already called for extraordinary general meetings across its companies to remove Mistry as a director, including Indian Hotels Co (IHTL.NS), Tata Chemicals Ltd (TTCH.NS) and Tata Motors.Tata Sons has blamed Mistry's abrupt exit on what it called breach of trust and poor performance, accusing him of eroding shareholder value. It has also said Mistry tried to reduce the role of Tata Sons, controlled by a series of charitable trusts.
Mistry has argued he tried to create internal barriers for better governance - a move that would reduce the Tata trusts' involvement in the operational issues of group companies, which he said should be controlled by their own boards of directors.The Tata trusts collectively own about two thirds of Tata Sons, while infrastructure company Shapporji Pallonji, owned by Mistry's family, is a minority shareholder in Tata Sons and he remains a director on the board of the holding company."A philanthropy running a commercial business creates its own paradoxes," said Institutional Investor Advisory Services, a proxy advisory, in a note about the feud.Tata Sons said on Sunday said it was "crucially important" for the board members, including independent directors, to consider the future of Tata companies and its stakeholders. A spokesman declined to comment further. (Additional reporting by Promit Mukherjee; Editing by Stephen Coates, Greg Mahlich)
This story has not been edited by Firstpost staff and is generated by auto-feed.