The hostilities between Tata Sons Ltd and sacked chairman Cyrus Mistry escalated on Thursday as the holding company of the $103-billion salt-to-steel conglomerate started the process to remove him from individual firms.
The process began with Tata Consultancy Services Ltd (TCS), India’s largest software services exporter and the group’s cash cow, where Ratan Tata-controlled Tata Sons holds a majority 73.26% stake.
TCS said in a stock-exchange filing that it received a letter from Tata Sons removing Mistry as the chairman with immediate effect and nominating Ishaat Hussain as the replacement till a new chairman is appointed.
Hussain is a Tata group veteran having spent more than three-and-a-half decades in various group companies. He took over as Tata Sons’ finance director in July 2000 and is also a director at TCS and chairman of Voltas Ltd.
TCS also said that Tata Sons has convened an extraordinary general meeting of shareholders to remove Mistry from the software services company’s board.
Separately, in a nine-page statement, Tata Sons accused Mistry of betraying the trust of Tata Sons and of adopting “devious moves” to take control of the main operating companies of the group.
Tata Sons had sacked Mistry as its chairman last month and appointed his predecessor Ratan Tata as the interim chairman. The move led to a bitter war of words between Mistry and the Tata group as he termed his sacking illegal and warned that group companies faced $18 billion in writedowns. (For details about the boardroom battle, click here.)
While the Tata Sons statement on Thursday said Mistry should have “gracefully” resigned from individual companies after he was removed as the holding firm’s chairman, he has been digging in his heels for a prolonged fight. Mistry remains the chairman of several Tata group companies. These include Indian Hotels Co, Tata Steel Ltd, Tata Motors Ltd, Tata Power Company, Tata Global Beverages Ltd, Tata Chemicals Ltd, Tata Industries Ltd and Tata Teleservices Ltd.
Tata Sons doesn’t hold a majority stake in many of these group companies, including Indian Hotels and Tata Chemicals, and will therefore find it more difficult to remove Mistry than in the case of TCS.
Like TCS, Indian Hotels said in a filing it had received a notice from Tata Sons asking for a meeting of the shareholders to remove Mistry as a director of the group’s hospitality arm that operates the Taj luxury hotels. Tata Sons holds a 28.01% stake in Indian Hotels, and what makes Tata Sons’ task tougher is the backing Mistry received from independent directors of Indian Hotels last week.
Also on Thursday, Mistry received the backing of another firm. Tata Chemicals said in a stock-exchange filing independent directors on its board “unanimously affirmed their confidence” in Mistry and the management in the conduct of the company’s business. Tata Chemicals has four independent directors—industrialist Nusli Wadia, DCB Bank chairman Nasser Munjee, former NABARD chief YSP Thorat and marketing veteran Vibha Paul Rishi.
Like this report? Sign up for our daily newsletter to get our top reports.