Trust in the Tata brand remains unchanged: Harish Bhat
Tata Global Beverages chairman says it’s ‘business as usual’ in all group firms despite the Tata vs Mistry spat.
The ongoing crisis in the US$103 billion conglomerate is unlikely to impact Brand Tata, said Harish Bhat, chairman of Tata Global Beverages Ltd and brand custodian of the group.
In an interview, he said that it was “business as usual” in all the operating companies even though the current spat had been tough to deal with at a personal level. Edited
excerpts:
As the custodian of the Tata brand are you concerned about brand erosion?
First and foremost, the Tata brand is the result of many decades of initiatives which have to do with providing excellent products and service to our customers, which have to do with providing value back to the community, and which have to do with the highest level of corporate governance. So, this is a brand which has been built assiduously over several decades. Second is the consumers, who buy our services and brands. Their trust in the Tata brand remains unchanged.
Has the Tata brand been affected with respect to stakeholders?
I would say this controversy perhaps has to some extent impacted the way some stakeholders look at the brand, and we will need to build on the brand and nurture it in the future, bearing that in mind.
(Cyrus) Mistry has alleged some governance violations. As a representative of the chairman office of Tata Sons, how do you respond to that?
Firstly, to have a chairman who is in open hostility with the promoter company puts at risk all the shareholders of the company. The company uses the brand name of the primary promoter company. There are credit ratings the company enjoys. People work in the company because it is part of a larger group. There are collaborations with joint venture partners which have been supported by Tata Sons. The other fact you mentioned is also very relevant. The board governance guidelines which was adopted by the board of Tata Global Beverages Ltd (TGBL) very clearly specified that if you were an employee of the company and if you were a non-executive director on the board of another Tata company and if you moved out of employment in your primary company, then you would also immediately resign from the boards of operating companies where you were a non-executive director. This was clause 2.9 of board governance guidelines which was adopted by the board of TGBL. It was adopted unanimously by the board, and the board at that time was chaired by Mistry. So, the question is now Mistry should also follow these guidelines which he has not done. I do believe that this is violation of the board governance guidelines. This is the second reason why we felt he should be replaced. This has been clearly mentioned in the appeal that Tata Sons has put out to all shareholders earlier this month.
Isn’t he still a director on the board of Tata Sons and hence an employee?
A non-executive director is not an employee. He was an employee of Tata Sons until he was the chairman of Tata Sons.
What about the allegations he has made about governance of the operating companies—Tata Sons and Tata Trusts?
I have been on the board of several operating companies of the group, and I must say that they are run independently by their own boards of directors. Our boards debate and discuss what the future strategy of the company should be, what the capital allocation should be. Those are decisions taken by the boards of the respective companies. As far as I am concerned, my experience on the boards of the companies is that the companies are independently run, are supervised by very competent boards composed of very competent and reputed independent and non-independent directors.
What happens if in certain EGMs Mistry is not voted out?
First and foremost I want to preface my answer to that to say that Tata Sons has issued an appeal to all our shareholders. Ratan Tata, our interim chairman has also written a letter to all our shareholders. In these letters and appeals, we have put forward our case very strongly on why the continued presence of Mistry on the boards of our operating companies can be disruptive and dysfunctional to those companies. The appeal from Tata Sons has also pointed out the corporate governance violation, which I discussed a little while ago. I am very confident that the shareholders will take those appeals and letters into account before deciding how they will vote in the best interests of the companies where they hold equity stake. For any reason, if the situation arises, as you are describing it, then it is up to the board of Tata Sons to decide what they would like to do.
What next now? How do you resolve this dispute?
We have EGMs coming up next week. In those EGMs, there are resolutions which Tata Sons has moved. Those resolutions will get voted upon. We are very keen to put the focus and spotlight very clearly on profitable growth of each operating firm within the company so that we can run as fast as required to create the right level of shareholder value.
Is the group prepared for a long legal battle?
The group will do whatever is right to safeguard our shareholders and safeguard all our stakes.
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