Tata removes Mistry as TCS chairman; Hussain interim chairman

The Tata Sons board meeting, on October 24, was supposed to discuss among other things, a note on governance – a document that envisaged freedom for operating companies to take independent decisions, expedite the decision-making process, and spell out well-defined roles for all stakeholders in the group.

After independent directors backed Mistry, Tata Chemicals Director Bhaskar Bhat today resigned from the company’s board saying concerns raised by him were totally ignored. However, he was allowed to keep his position as Chairman of various other companies of the Tata Empire – including Indian Hotels, Tata Steel, Tata Motors and Tata Chemicals.

Mistry’s family owns an 18.41 per cent stake in Tata Sons.

The promoters holding in the company stood at 73.33 % while Institutions and Non-Institutions held 22.18 % and 4.49 % respectively. The vote of institutional investors will be decisive in these companies.

MUMBAI India’s Tata Sons [TATAS.UL] has called an extraordinary shareholder meeting at Tata Motors Ltd (TAMO.NS), in its latest attempt to drive out former chairman Cyrus Mistry from all parts of the $100 billion (£79.15 billion) steel-to-software conglomerate. The EGM will have to be held in 45 days. Section 115 of The Companies Act 2013 lays down the law for resolutions requiring special notice. “The director sought to be removed has a right to defend himself”.

In his resignation letter, Bhat said, “I have just read the statement put out by the independent directors on the BSE website”. A similar move to unseat Mistry from TCS, the crown jewel in the Tata conglomerate portfolio, was anticipated given the bitter war of words that has erupted between the two sides following Mistry’s ouster.

Interestingly, the two main trusts controlling Tata Sons – Sir Dorabji Tata Trust and Sir Ratan Tata Trust – saw their dividend income more than double from Rs.166.62 crore in 2014-15 to Rs.499.87 crore in 2015-16, as per the company’s filings with the Registrar of Companies.

Irrespective, Tata Sons’ move to call for EGMs at IHCL and TCS, may well be expected at other group firms.

As to Mistry, 48, he remains chairman and non-executive director at group companies including Tata Power Ltd, Jaguar Land Rover’s parent and Tata Chemicals Ltd. Hussain will reportedly replace Mistry as chairman until a permanent appointment is made to the board. Soon after TCS intimated the bourses, the Mistry camp said “the hasty actions appear to have been done in the night” of November 9.