In his first communication to shareholders since the ouster of Cyrus Mistry, Ratan Tata, interim chairman of Tata Sons, said his continued presence on the boards of Tata Group companies is a "serious disruptive influence" and can make these entities "dysfunctional" due to his "open hostility" towards the main promoters, the Tata Sons. He sought the support of shareholders to remove Mistry as a director from the boards of six Tata companies at forthcoming extraordinary general meetings also seeking to dispel concerns about "uncertainty" by reiterating future strategy for the group.
Tata said Mistry was appointed director of Tata companies only as a corollary of him being the chairman of Tata Sons. Now that the company has replaced Mistry as its chairman, the "right step" for him would be to resign from directorship of these Tata entities, he said. The 79 year old said Mistry was replaced as Tata Sons chairman after the board "lost confidence" in him and his ability to lead the group, adding that the "deliberated action" was taken "after the relationship with Mistry steadily deteriorated and several attempts to re-mediate went unheeded." He also said that Mistry was offered an opportunity to step down voluntarily, which he rejected saying it should be taken up at the board. "This was done and Mistry was formally replaced."
"The right step would have been for him to resign as a director. Unfortunately, he has not yet done so, and his continued presence as a director is a serious disruptive influence on these company boards, which make the company dis-functional, particularly given his open hostility towards the primary promoter, Tata Sons," Ratan Tata said. The mentioned company had sought the man's ouster from the boards of TCS, Tata Steel, Tata Motors, Tata Power, Indian Hotels and Tata Chemicals. The holding company of the group has not yet moved a proposal to remove Mistry as a director of Tata Global Beverages.
Tata's letter to shareholders read, "if the current situation has caused you uncertainty in recent weeks, it is our firm resolve to focus on the group on growth through the induction of new leadership which is currently underway." He added, "Some of the investments have been hugely successful- TCS, Jaguar Land Rover- while some others like Tata Steel Europe have taken time to be profitable. Our approach has been to support and fund these businesses during their development and growth phases. We exit the business only when we believe it is unviable."
Tata doesn't speak the truth: Mistry
Terming Ratan Tata's letter to shareholders of Tata companies a combination “misrepresentation and convenient mischaracterisation,” Mistry hit back saying the veteran industrialist is lying. In a statement, Mistry's office also denied that his sacking was preceded by various attempts to discuss with him. “Mr Ratan Tata does not speak the truth. His claim that Mr Mistry's treatment at Tata Sons board on that day was well-deliberated and was preceded by various attempts to discuss with Mistry is a lie,” the statement said. It claimed that “five minutes before the board meeting scheduled on October 24, 2016, Nitin Nohria and Tata came to Mistry's room and told him that on that very morning, the trustees had taken a decision to replace Mistry ostensibly because Tata could not get along with him.”
Tatas trying to buy 1.7% of Tata Motors shares
Days ahead of Tata Motors' shareholders meet on December 22 to decide on the removal of Cyrus Mistry from its board, foreign brokerage major Morgan Stanley has been mandated to buy up to 50 million shares of the automobile major at a 10% premium to the stock's closing price of Rs 454.4 on Monday. While the term sheet for the deal does not disclose the buyer's identity, a number of fund managers and merchant bankers said the mandate had most likely come from the Tata Group, which appears keen to shore up its holdings in the auto company and secure the vote against Mistry. The total deal, valued at about £250 million and representing 1.73% of the automaker's equity capital.
