Tata ousts Cyrus Mistry as TCS Chairman; calls meeting to remove him from IHCL too
In sharp escalation of boardroom battle at Tata Group, patriarch Ratan Tata-led holding entity removed Cyrus Mistry as Chairman of TCS, the conglomerate's most successful firm, and called a shareholders meet to remove him from IHCL that runs Taj hotels.
New Delhi: In sharp escalation of boardroom battle at Tata Group, patriarch Ratan Tata-led holding entity removed Cyrus Mistry as Chairman of TCS, the conglomerate's most successful firm, and called a shareholders meet to remove him from IHCL that runs Taj hotels.
Mistry, who was ousted as Chairman of Tata Sons in a surprise move last month, however dug in his heels, rallying around independent directors of Tata Chemicals Ltd -- the second group firm after Indian Hotels Co Ltd (IHCL) where independent directors have backed him as Chairman.
Even after being removed as Chairman of Tata Sons, Mistry continues to head the group's several listed firms including Tata Motors, Tata Power, Tata Steel and Tata Chemicals.
In the absence of Tata Sons having an absolute majority stake in many of the listed group entities, it is difficult to evict Mistry, setting the stage for power struggle.
Tata Sons replaced Mistry with Ishaat Hussain as Chairman of India's largest software services firm, Tata Consultancy Services (TCS), a move seen as an attempt by Ratan Tata-led promoter group trying to tighten grip over the USD 100 billion salt-to-software conglomerate.
Tata Sons, which holds a 73.26 percent stake in TCS, called an extraordinary general meeting of shareholders "to consider a resolution for the removal of Cyrus P Mistry as Director of the Company," the software firm said in a regulatory filing.
Mistry camp hit back calling the removal as reflection of "cloak and dagger" machinations that define "the angry strategy of the Ratan Tata camp".
"Cloak and dagger machinations with little regard to due process of law has come to define the angry strategy of the Ratan Tata camp," said a source close to Mistry said.
Mistry also got a shot in arm when independent directors of Tata Chemicals today "unanimously" backed him and the management in the conduct of the company's business.
Tata Chemicals, in which Tata Sons has 19.35 percent stake, in a separate regulatory filing said its independent directors at a meeting today recalled and reaffirmed their earlier assessment and evaluation carried out in the year 2015 and 2016 of the Chairman, the Board, and its functioning.
Tata Sons asked IHCL, where it holds 28.01 percent, to call an extraordinary general meeting (EGM) shareholder meet to consider removing Mistry as director of the company. Mistry is Chairman of IHCL.
It may also call shareholder meetings to vote Mistry out of some of other listed companies where he is Chairman.
TCS said it has received a letter dated November 9, 2016 from Tata Sons Ltd nominating Hussain as the Chairman of the Board of Directors of the company in place of Mistry with immediate effect.
"In view of this, Mistry has ceased to be the Chairman of the Board of Directors of the company and Hussain is the new chairman of the company," TCS said.
Hussain, 69, a director at several Tata companies, including Tata Steel and air conditioning and engineering arm Voltas Ltd, will remain TCS chairman until a permanent new replacement is made. A chartered accountant, he currently serves as chairman of Voltas and satellite television provider Tata Sky.
"Tata Sons has issued a special notice under Section 169 read with Section 115 of the Companies Act, 2013 and a requisition for convening an extraordinary general meeting of shareholders of the company under Section 100(2) of the Companies Act, 2013 to consider a resolution for the removal of Cyrus P Mistry as Director of the Company," TCS added.
Sources in the Mistry camp said TCS has quoted Article 90 of Articles of Association while removing him. "Article 90 only enables Tata Sons to nominate a Chairman. The board then has to appoint the person so nominated. Tata Sons had asked TCS yesterday (November 9) that it would like Mistry replaced by Hussain - it made a nomination," the source said.
Further, TCS had to then convene a board meeting to table the nomination at the board through either a meeting or via a circular resolution.
"Nothing of this nature was done. In pre-meditated haste, by a letter of the same date, TCS has directly gone on to announce that Mistry stands replaced," a source claimed, adding that the hasty action appear to have been taken at night as the stock exchange announcement came as early as 0800 hrs today.
While the ouster of Mistry has triggered a public spat between him and Tata Sons, his family continues to controls an 18.41 percent stake in Tata Sons. Mistry, who was replaced by his predecessor Ratan Tata as interim Chairman of Tata Sons, continues to be the chair of some of the key listed group companies.
"...A requisition is received from Tata Sons, a shareholder of Indian Hotels Company Ltd, holding 28.01 percent of the paid-up equity share capital of the company to convene an extra-ordinary general meeting of the shareholders of the company... To pass the resolution for removal of C P Mistry as Director of the company," the hospitality major said in a BSE filing.
Last week, IHCL had in a regulatory filing stated that independent directors had unanimously backed Mistry and supported his continuance as chairman of the company.
Tata Chemicals, where Mistry is the Chairman, non- independent, non-executive director, has Wadia Group Chairman Nusli N Wadia, DCB Bank Chairman Nasser Munjee, former NABARD Chairman YSP Thorat and marketing professional Vibha Paul Rishi among its indepedent directors.
"The Independent Directors referred to the minutes of the above meetings outcome of which was with the entire Board at that time," Tata Chemicals said.
They also considered the subsequent statement made by the Board of Directors in the Annual Report in which the Board recommended and sought the support (of all shareholders) for confirmation of Mistry's re-appointment at the Annual General Meeting held on August 11, 2015 and noted that the same was approved by 97.64 percent of the votes cast.
"Considering the above the Independent Directors unanimously affirmed their confidence in the Board, its Chairman and the management in the conduct of the company's business," the filing said.
Tata Chemicals further said its independent directors also "reaffirmed that all the decisions taken with regard to the operations and business of the company had been take by the board unanimously and executed by the Chairman and the management as per the directions of the board".
"Independent Directors also wish to reassure all the stakeholders, management of the company and its subsidiaries wherever located of their full confidence and support," the filing added.