While the ruling Samajwadi Party was hogging media limelight on Monday, an abrupt high-profile resignation shifted all the cameras towards the Tata Group. In a very sudden ouster, Cyrus Mistry was sacked as the chairman of the Tata Group on Monday and reinstated Ratan Tata as the interim head.
It was a development that can trigger a confrontation between the single-largest shareholder and the company's founding family. Mistry's family firm Shapoorji Pallonji Group, which has 18.4 percent in Tata Sons — the holding company of $100-billion salt-to-software conglomerate — is believed to be considering fighting out the "illegal" removal.
In the surprise development, the board of Tata Sons, where 66 percent shares are held by philanthropic trusts endowed by members of Tata family, ousted chairman Mistry saying it was acting "for the long-term interest" of the firm. Ratan Tata on Tuesday asked CEOs of group firms to focus on their business and enhancing returns to shareholders without being distracted by change in top leadership. After attending Monday's eventful board meeting of Tata Sons — the holding company of Tata group — where Mistry was voted out, the Tata family patriarch met chief executives of group companies to talk about ongoing initiatives.
"We will evaluate and continue to undertake those (steps) that are required to. If there is any change, they will be discussed with you," 78-year-old Tata, told the top executives of the $100 billion conglomerate.
Sources said he did not discuss the reasons that led to the sudden removal of Mistry. To make matters simpler for our readers, here are the top developments in the story on Tuesday.
- Ratan Tata meets group CEOs
A day after Tata Group abruptly ousted Cyrus Mistry as chairman, interim head Ratan Tata on Tuesday asked CEOs of group firms to focus on their business and enhancing returns to shareholders without being distracted by change in top leadership. After attending Monday's eventful board meeting of Tata Sons — the holding company of Tata group — where Mistry was voted out, the Tata family patriarch met chief executives of group companies to talk about ongoing initiatives.
Stating that his role is for short term so as to ensure stability and continuity in the group, Tata asked top executives of the $100 billion conglomerate to act as leaders in respective markets and focus on enhancing returns to shareholders. "I assumed the role of the interim chairman for stability and continuity so that there is no vacuum. This will be for a short time. A new permanent leadership will be in place," he said while addressing managing directors and senior leaders of Tata companies at the Bombay House.
According to CNBC-TV18, informed sources said that Ratan Tata has asked group CEOs to seek Mistry's resignation. The report further added that board of group companies will meet in two weeks to decide on this matter.
2. Tata Sons board meet
The board meeting happened on Monday but the details surfacd only early on Tuesday. CNBC-TV 18 quoted sources as saying that Mistry sought reasons for removal and asked the board what was the urgency to replace him. The Board told Mistry they have discussed the matter and have all the right to replace him. Mistry sought time from Tata Sons board to think. In the same meeting, the age limit was relaxed to facilitate Ratan Tata's re-entry on the Tata Sons board, according the CNBC-TV18.
3. Tatas file caveats in Supreme Court, Bomabay High Court, National Company Law Tribunal
The boardroom battle at Tata group appeared to be heading for a legal tussle with Tatas filing caveats in the Supreme Court, Bombay High Court and the National Company Law Tribunal against Cyrus Mistry moving for relief against his ouster as chairman. In a bid to prevent Mistry from getting any ex-parte relief from any legal forum, Tata Sons and a Tata Trust, among others, filed the caveats that they should be heard before grant of any relief to the ousted chairman. The petitions included one by Ratan Tata and others against Mistry.
4. Tata group stocks fall up to 3 percent after Cyrus Mistry ouster
Tata Group stocks on Tuesday ended up to 3 percent lower after Cyrus Mistry was removed as chairman of India's largest conglomerate and replaced by his predecessor Ratan Tata in the interim, with key firms losing nearly Rs 10,700 crore collectively in market capitalisation. Shares of Tata Steel fell by 2.51 percent, Tata Power lost 1.5 percent, Tata Consultancy Services slipped 1.20 percent and Tata Motors went down by 1.07 percent on BSE. The market valuation of TCS declined by Rs 5,753.3 crore to Rs 4,72,636.70 crore, while Tata Motors lost Rs 2,432.01 crore to Rs 1,58,990.99 crore. The valuation of Tata Steel dropped by Rs 1,039 crore to Rs 40,354 crore and Tata Power saw an erosion of Rs 337.38 crore to Rs 22,272.62 crore.
5. Mistry’s interview link removed from the Tata website
Soon after sacking Mistry, the group removed link to his first and last interview to the Tata website where he had his 2025 vision to make the firm among the 25 most admired corporates and employers globally.
6. Tata firms inform bourses about top-level change
With Ratan Tata taking over as interim chairman of Tata Sons after the ouster of Cyrus Mistry, various firms belonging to the conglomerate have informed bourses about the top-level change at the group's main holding company.
7. No decision yet on legal recourse to Mistry ouster: Shapoorji
A day after its nominee Cyrus Mistry was ousted as Chairman of Tata Group, Shapoorji Pallonji on News18 said it is studying the "circumstances" and has not yet decided on taking legal recourse. The single largest shareholder with 18.4 percent stake in Tata Sons — the holding company of Tata Group, Shapoorji said it will make a statement on the course of action it chooses when such a thing becomes necessary. "Neither the SP Group nor Mr Cyrus Mistry have made any statement yet. While the circumstances are being studied, there is no basis to media speculation about litigation at this stage. As and when a public statement becomes necessary, it would be made," the construction group said in an emailed statement.
8. Industrialist Adi Godrej’s comments
Adi Godrej told CNBC TV-18, "Not privy to why problems occurred, resolution looks unlikely unless there are legal interventions. Developments not good for Tata’s reputation, Indian biz. Difficult situation for Mistry’s successor to take over."
9. TCS CEO and JLR CEO inducted in Tata Board
In a late evening development, CNBC-TV18 confirmed that TCS CEO N Chandrasekaran and JLR CEO Ralf Speth have been inducted in the Tata Sons board. According to industry experts, the two honchos can be considered for the chairman's post in the future.
EXCLUSIVE: N Chandrasekaran, Ralf Speth Appointed To Tata Sons Board. N Chandrasekaran Is Currently CEO Of TCS, While Speth Is CEO Of JLR pic.twitter.com/38GkPIXWJe
— CNBC-TV18 (@CNBCTV18Live) October 25, 2016
— CNBC-TV18 (@CNBCTV18Live) October 25, 2016
10. Indira Nooyi and Noel Tata are top contenders for Tata Sons chairman post, reported CNBC-TV18
With inputs from agencies
Updated Date: Oct 25, 2016 20:56 PM