Indian Hotels independent directors back Cyrus Mistry; Tatas lose round one?

Mumbai: In an indication that it may be Tatas to deal with Cyrus Mistry in companies where he is director or chairman. At the board meet of Indian Hotels on Friday at Bombay House, the headquarters of the 148 year-old salt-to-software group, with Cyrus Mistry in the chair -- the first for a Tata Sons firm after the 49-year-old industrialist was ousted as the group chairman, independent directors expressed full faith in him as the chairman.

According to a report in the Indian Express, independent directors included 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, the report said.

Evidently, this round went to Mistry.

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Even as the company deliberated on the second quarter results and reported a net consolidated loss of Rs 38.38 crore, against Rs 116.79 crore for the like quarter of the previous year, not much emerged on the actual atmospherics of the meeting.

Cyrus Mistry. AP

But in a statement later, independent directors expressed full confidence in the chairman.

"Taking into account board assessments and performance evaluations carried out over the years, the independent directors unanimously expressed their full confidence in the chairman, Cyrus Mistry, and praised the steps taken by him in providing strategic direction and leadership to the company," it said.

"After deliberations, the independent directors came to a view that being a listed company, it was imperative for the independent directors to state their views to the investors and public at large, such that those who trade in securities of the company make an informed decision."

Quoting an institutional source, the Indian Express report said, “It will be tough for Tata Sons to remove Mistry through a board resolution. Mistry has enough support in the board.”

The company's said in a regulatory filing that its consolidated total income from operations stood at Rs 884.95 crore, against Rs 894.37 crore. Among other items, it also reported a loss of Rs 103.07 crore on account of the sale of Boston property.

After his ouster as Tata Sons chairman, Mistry had charged the management of Indian Hotels with selling properties at a loss.

"The onerous terms of the lease for Pierre in New York are such that it would make it a challenge to exit," he had said in a letter to the Tata Sons board, soon after his ouster, which made its way to the media and raised several queries.

"Indian Hotels, beyond flawed international strategy, had acquired the Searock property at highly inflated price and housed in an off balance sheet structure. In the process of unravelling this legacy, Indian Hotel has had to write down nearly its entire net worth over past three years," he said.

"This impairs its ability to pay dividends."

The developments have had an impact on the stock prices of the company. In the eight trading sessions since his removal, the shares of Indian Hotels have fallen nearly 14 percent -- from Rs 129.75 to Rs 112.

As regards the scenes outside Bombay House, private security personnel allegedly assaulted media photographers who had gathered there to cover the arrival of Tata Sons' sacked chairman Cyrus P. Mistry for a board meeting at the headquarters.

At least one photographer was virtually pinned down by four-five security personnel, brutally punched, slapped and then pushed away from the building entrance in south Mumbai's busy Fort area.

The camera and other equipment of at least two photographers was badly damaged or broken by the security personnel in the fracas.

Among the lensmen beaten up were Atul Kamble (Mid-Day), Suryakant Niwate (Business Standard) and Arijit Sen (Hindustan Times), who have been admitted to the St. George Hospital for treatment.

Police arrived on the scene a short while later and were in the process of lodging complaints on the matter.

(With additional inputs from IANS)