Tatas remove Mistry as TCS director
... the trust reposed by Tata Sons in Mr Mistry... has been betrayed by his desire to seek to control main operating companies of the Tata group...
MUMBAI: Tata Sons made its first move on Thursday to wrest control of group companies by replacing Cyrus Mistry and nominating group veteran Ishaat Hussain as the chairman of TCS, the conglomerate’s mostprofitable company.
The boardroom battle for control of the $103-billion Tata group also saw for the first time the warring sides trade charges, counter-charges on the same day and disclose crucial information, that apart from painting a dismal financial picture reaffirms what most analysts have been saying, that Tata Consultancy Services and Jaguar Land Rover alone account for 90% of the group’s profits.
The unprecedented no-holds TATA SONS, in a statement barred attack from Tata Sons saw the 150-year old conglomerate accuse Mistry of betraying trust and of adopting devious means to usurp control of key group companies.
The Tatas initiated Thursday’s attack by first nominating group veteran Hussain as TCS chairman and subsequently calling for extraordinary general meetings at TCS and Indian Hotels to vote out Mistry as a director.
The trigger for such a move was the unexpected rallying of independent directors of Indian Hotels last week, endorsing Mistry’s leadership, which hit at the Tatas’ stance of non-performance by Mistry. By late Thursday, independent directors of Tata Chemicals also issued a similar show of support for Mistry signaling a clear divide between Tata Sons and independent directors.
Tata Sons’ anticipation of a possible wresting of control of group companies by Mistry was spelt out in their letter.
“Having been replaced as the chairman of Tata Sons, where the majority of the board and the major shareholders had expressed lack of confidence, Mr Mistry is trying to gain control of Indian Hotels with the support of the independent directors of the board. He has cleverly ensured over these years that he would be the only Tata Sons representative on the board of IHCL in order to frustrate Tata Sons’ ability to exercise influence and control on IHCL.”
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