In battle with Mistry, Ratan Tata finds a foe in former friend Wadia
REWIND MODE Wadia had helped Tata quell directors in the past; now Tata Sons calls EGMs at three firms to oust him along with Mistry
MUMBAI:Life seems to have turned a full circle for Tata Sons interim chairman Ratan Tata. The veteran industrialist, who once teamed up with friend and Bombay Dyeing chairman Nusli Wadia to quell ambitious group satraps in the nineties, on Friday, had to see his group seek extraordinary general meetings (EGMs) to oust Wadia himself apart from former group chairman Cyrus Mistry, from the boards of Tata Steel, Tata Motors and Tata Chemicals. All three group companies informed stock exchanges on Friday that they have received notices from Tata Sons for the removal of Mistry as chairman and Wadia as independent director from respective boards.
Independent director Bhaskar Bhat, who quit as director from Tata Chemicals’ board on Friday, told Press Trust of India later in the day that he had asked Mistry to step down as chairman as his continuance posed ‘great risk’ to the firm in the wake of loss of confidence in him by Tata Sons.
While Tata Sons has been waging a boardroom battle with Mistry ever since October 24 when the board of the group holding company replaced Mistry as chairman, the move against Wadia started after the outspoken industrialist participated in a show of support for Mistry at Tata Chemicals’ board meeting on November 10.
With Wadia being an independent director on boards of Tata Steel and Tata Motors, the Tatas may have initiated the move to quell any possibility of similar show of support in these two group companies.
It’s just a coincidence that Ratan Tata has to contend with the same firms – Tata Steel, Tata Chemicals and Indian Hotels — with the addition of TCS, to establish control; he had to address fiefdom issues in the 90s.
In the past, it was the powerful company heads — Darbari Seth of Tata Chemicals, Russi Mody of Tata Steel and Ajit Kerkar of Indian Hotels — whom Ratan Tata battled with and succeeded. Wadia had backed him then.
But Thursday’s situation was in sharp contrast — senior management at Bombay House deliberated on their strategy, following reports of yet another show of support for Mistry from the independentdirectorsof TataChemicals. Independent directors of both Indian Hotels and Tata Chemicals had backed Mistry’s leadership earlier.
“It is surprising why Wadia has been singled out here. To target one independent director, leads us to conclude that the differences are more personalitydriven,” said Amit Tandon, managing director IiAS, a proxy advisory firm that advises minority shareholders on how to vote at annual general meetings.
Independent directors of companies where Mistry is chairman could also step down, since their positions would become untena- ble if Mistry moves out.
“It is the prerogative of the shareholder to ask for the removal of directors and in this case, Tata Sons has sought the removal of Wadia,” said Shriram Subramanian, founder, InGovern, another proxy advisory firm.
Meanwhile, it has also emerged that Indian Hotels Company Ltd (IHCL) had set up an independent committee in July to inquire into allegations of sexual harassment by an ex-employee against its CEO Rakesh Sarna. “The company has a strict code of conduct under which an independent committee has been set up to inquire into an issue received from an ex-employee,” an IHCL spokesperson said.
Mistry’s office on Friday confirmed he had been approached by an employee complaining of harassment. “Mr Mistry assured her that the Tata Group stands fully committed to support her,” the statement said.
The employee was offered an alternative position but left the group, the statement said, adding that Mistry set up an investigation and a review of practices across the group.