Nigeria Sun Friday 11th November, 2016
• Tata’s debt increased by Rs.69,877 under Mistry
• Mistry will continue his positions in Tata companies through his family share
• Ishaat Hussain will replace Mistry as new interim Chairman
MUMBAI, India – After Tata Sons dismissed Chairman Cyrus Mistry last month alleging misconduct by Mistry, Tatas have now released a nine-page statement explaining the reasons for his ouster.
The statement claimed that Mistry had betrayed their trust and sought to control the group’s main operating companies.
The Mumbai-based conglomerate in an emergency general meeting removed Mistry from his post on October 24.
Following his removal, Mistry sent an email, which was leaked, claiming that he was used as a lame duck and warned the company of a writedown worth $18 billion.
Since then, a response from the Tatas was awaited.
On Thursday, in a statement, Tatas said, “It is unfortunate that Tata Sons, acting in good faith, did not anticipate such devious moves by Mr. Mistry and thereby did not inform the other directors of the operating companies about its dissatisfaction with Mr. Mistry at the level of Tata Sons. However, we will now do whatever is required to deal with this situation.”
“Mistry betrayed trust and had the desire to seek control of the main operating firms of the Tata Group, excluding other representatives. Under Mistry, the Group’s over 100-year-old structure was consciously dismantled. Its firms were drifting away from the promoters and shareholders,” the statement added.
Tata Sons said that under Mistry, the group’s debt increased by Rs.69,877 crore to Rs.225,740 crore during his four-year tenure. The group also accused that despite the huge investments, return were not visible.
“While dividend income was declining, expenses (other than interest on debt) on staff increased from Rs.84 crore to Rs.180 crore and other expenses increased from Rs.220 crore in 2012-13 to Rs.290 crore in 2015 (excluding exceptional expenses),” it said.
In addition to that, Tata Sons has also accused Mistry of conflict of interest in relation to Shapoorji Pallonji group which Mistry did not fully address.
The Shapoorji Pallonji group, a construction major, is owned by Mistry’s family.
The statement said, “Cyrus P Mistry has been the Executive Vice Chairman (for one year) and Executive Chairman for nearly four years now – a period long enough to show results in Tata Sons itself, which was his primary executive responsibility.”
“After four years, it is unfortunate that hardly any of his (Mistry’s) major views on the management structure (which had impressed the committee favourably) have been implemented,” the statement said.
The company has also announced the replacement of Mistry in Ishaat Hussain as interim Chairman of TCS.
Hussain currently serves as the Chairman of the Voltas and Tata Sky.
He also holds the position of Director in several other companies in the group including Tata Steel.
A source close to Mistry said, “TCS has quoted Article 90 of its Articles of Association to do so. Article 90 only enables Tata Sons to nominate a chairman. The board then has to appoint the person so nominated. Tata Sons had asked TCS on November 9 that it would like Mistry replaced by Hussain — it made a nomination.”
“TCS had to then convene a board meeting and table the nomination at the board at a meeting or through a circular resolution. Nothing of this nature was done. In pre-mediated haste, by a letter of the same date, TCS has directly gone on to announce that Mistry stands replaced. The hasty actions appear to have been done at night and the stock exchange announcement at 8am. A cloak and dagger machination with little regard to due process of law has come to define the angry strategy of the Ratan Tata camp. After Mistry’s replacement, till date no reasons have been forthcoming – just vague statements about ‘culture’ and ‘trust deficit’,” he added.
Despite Mistry’s removal and the ongoing spat between the two parties, Mistry will continue in his positions in other companies under the group as his family controls a 18.41 percent stake in Tata Sons.