Now independent directors of Tata Chem say Mistry is boss
BOARD BRAWL Even as Tata Sons announced a chairman for TCS, second group company reposed faith in Mistry
MUMBAI: In a clear repetition of the developments at Indian Hotels last week, independent directors of Tata Chemicals on Thursday reposed their faith in chairman Cyrus Mistry, while taking up the second-quarter results for this financial year.
The move came on a day when Tata Sons said Mistry must resign from the boards of all group companies, and called extraordinary general meetings (EGMs) of Tata Consultancy Services (TCS) and Indian Hotels to vote out Mistry as a director. Thegroupalsonamed Ishaat Hussain as new chairman of TCS.
This pitches the independent directors directly against the group holding company.
The independent directors met and reviewed the impact on Tata Chemicals in view of the “recent events”, which they said could affect the management of the company’s business. “The independent directors unanimously affirmed their confidence in the board, the chairman and the management in the conduct of the company’s business,” the directors said in a statement.
They also reaffirmed that all decisions taken with regard to operations and businesses of the company had been taken by the board unanimously and executed by the chairman and management according to the directions of the board.
Tata Chemicals’ independent directors include industrialist Nusli Wadia, Nasser Munjee, YSP Thorat (retired chairman of Nabard) and marketing professional Vibha Paul Rishi.
The directors reaffirmed their earlier assessment and evaluation carried out in 2015 and 2016 of the chairman, the board and its functioning. They also considered the statement made by the directors in the earlier annual report, where the board recommended and sought the support of all shareholders for confirmation of Mistry’s reappointment at the annual general meeting on August 11, 2015. The same was approved by 97.64% of the votes cast.
Last week, the independent directors of Indian Hotels Company Ltd (IHCL) had also backed Mistry as the chairman of the luxury hotels operator.
For the July-September quarter, Tata Chemicals reported a net profit of ₹293.04 crore, a marginal rise from ₹292.80 crore in the same quarter last year.
Earlier on Thursday, UK Sinha, the chairman of Securities and Exchange Board of India (Sebi), said corporate governance was high on the regulator’s agenda. Refusing to comment on specific developments at the Tata Group, Sinha said independent directors need to protect interests of all stakeholders. “Independent directors have a fiduciary duty to perform. They must take care of the interest of all the shareholders. Besides, they need to follow Sebi and Company Act guidelines.”
Meanwhile, proxy advisory firm InGovern said the vote of institutional investors will be decisive for Tata Sons if it seeks to oust Mistry from the chairmanship of other listed group companies, particularly in those where the parent company holds below 40% stake. “In these companies, the vote of institutional investors will be decisive. Perhaps this is a reason why Tata Sons has come out with a detailed statement.”