Cyrus Mistry, who was sacked as the chairman of Tata Sons Ltd last month, got a morale booster on Friday when he received the backing of independent directors on the board of the diversified conglomerate’s hospitality arm.
The independent directors of Indian Hotels Co. Ltd “unanimously” expressed their full confidence in Mistry, who remains its chairman, the operator of the Taj group of hotels said in a stock-exchange filing.
The directors also “praised steps taken by him (Mistry) in providing strategic direction and leadership to the company”, Indian Hotels said.
According to the filing, the independent directors felt that, being a listed company, it was imperative for them 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.
The independent directors, including top banker Deepak Parekh and Nadir Godrej, met ahead of the company's board meeting scheduled for today. Gautam Banerjee, Keki Dadiseth, Vibha Rishi and Ireena Vittal are the other independent directors on the board.
Mistry remains chairman of several group companies including Tata Steel, Tata Power and Indian Hotels. Tata Sons is seeking to oust Mistry from his positions in the group firms but it might not be easy as Tata Sons doesn’t have a majority stake in many of these firms.
The board of Indian Hotels met after the meeting of the independent directors and approved the financial results for the July-September quarter. The meeting was chaired by Mistry, and it is not clear if Mistry’s removal from the chairman’s post was on agenda.
Besides Mistry, his brother Shapoor Mistry is also a director on the board of Indian Hotels. The company’s CEO, Rakesh K Sarna, and executive director Mehernosh S Kapadia are the other board members.
Indian Hotels was one of five “legacy hotspots” that Mistry identified in a letter to the Tata Sons board on 26 October when he also warned that the group faced Rs 1.18 trillion ($18 billion) in writedowns because of the unprofitable businesses he inherited.
He had said that Indian Hotels, Tata Motors’ passenger vehicle division, Tata Steel’s European operations and the power and telecom units were the five unprofitable businesses he inherited when he took as the group chairman four years ago.
Mistry had said that Indian Hotels followed a “flawed” international strategy under Ratan Tata and that the company had to subsequently sell several properties at a loss. “In the process of unravelling this legacy, IHCL has had to write down nearly its entire net worth over the past three years,” he said in the letter.
Indian Hotels, in July, agreed to sell its Taj Boston hotel in the US to AS Holdings LLC, Boston for $125 million (about Rs 840 crore). The company had acquired the hotel in 2006 for $170 million (about Rs 815 crore then).
Also in July, Indian Hotels sold a 5.1% stake in Belmond Ltd, the firm that ran an international chain of luxury hotels under the Orient Express banner before it was rebranded, for $49.5 million. In 2014, it sold its Blue Sydney Hotel to Hong Kong-based Hind Group for around $30 million.
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