‘Mistry had planned to double dividends for Tata shareholders’
MUMBAI: Cyrus Mistry, the ousted chairman of India’s biggest conglomerate, had proposed to more than double the dividend holding company Tata Sons Ltd would pay its shareholders by 2020, according to a person with direct knowledge of the matter.
In a strategy document that was presented to the board three times, Mistry had recommended boosting the payout to eight billion rupees (RM504 million), compared with 3.23 billion rupees as of March, said the person.
The dividend proposal counters accusations that the Tata Trusts — the majority owner of Tata Sons — had no visibility into the company’s future cash flows and were starved of information on group units, and helps to shed light on the power struggle behind the most dramatic boardroom coup India has seen in years.
“The reasons for sacking Mistry as chairman are still unclear,” said Shriram Subramanian, founder of InGovern Research Services, a proxy adviser.
“Both camps are listing their side, but the reality that triggered the abrupt removal of Mistry would be different.”
Mistry, 48, was replaced as Tata Sons chairman by his 78-year-old predecessor Ratan Tata at a board meeting on October 24.
Tata Sons said the conglomerate’s board and trustees of the Tata Trusts were concerned about a growing “trust deficit” with Mistry, which prompted them to remove him.
The former chairman had made presentations for the past couple of years on cash flows to Tata Sons based on different assumptions of potential growth, said the person.
Tata Sons made a 6.5 billion rupee payout last year after Tata Consultancy Services Ltd, the group’s biggest unit by market value, handed out a special dividend.
In his presentation, Mistry included problems at five unprofitable group units, said the person.
In an email sent to Tata Sons directors a day after he was fired, Mistry described Tata Steel Ltd’s European operations, Tata Teleservices Ltd, Tata Motors Ltd’s local business, Indian Hotels Co and Tata Power Ltd as “legacy hotspots”. Bloomberg