Cyrus Mistry likely to have an edge at the Tata Power Board meet today

The attempt of the Tata camp could possibly be to block a vote of confidence for Cyrus Mistry

Cyrus Mistry, who was ousted as the chairman of Tata Sons on October 24, is likely to have an edge at the Tata Power board meeting on Tuesday. As the last of the big six Tata Group companies heads for a board meeting, the buzz is that there wouldn’t be any move to replace Mistry as the chairman of Tata Power. A source said that “the numbers are not there” on the board of Tata Power to remove Mistry. In fact, the attempt of the Tata camp could possibly be to block a vote of confidence for Mistry. 

The strategy of the Tatas would be to prevent a show of support for Mistry, so that there’s no repeat of what happened at the Indian Hotels board soon after Mistry was ousted as Tata Sons chairman, it is learnt. A source in Mistry camp said they have not received any circular resolution on Mistry’s removal. It’s also not on the listed agenda of the board. 

The board of Tata Power is meeting on Tuesday afternoon to get its half-yearly financial results approved. 

At the board meeting of Indian Hotels, which runs the Taj chain, independent directors, who met separately, had voted in favour of Mistry and had praised his leadership. The same happened at Tata Chemicals board meeting, but later director Bhaskar Bhat resigned from the board saying his views were ignored. Among the other big companies, Mistry was replaced as chairman of Tata Consultancy Services (TCS), Tata Steel and Tata Global Beverages, but the independent directors of Tata Motors backed the management, while stopping short of full support to Mistry. The six independent directors of Tata Steel were split in 3-3 each on independent director Nusli Wadia’s proposal on a statement to endorse all the decisions taken till then by the board. The statement was never made to the shareholders.

Cyrus Mistry later termed the Tata Global Beverages move illegal and sent the company a legal notice. Following this, Tata Global came out with a circular resolution to remove Mistry.

Whatever the outcome of the board meeting on Tuesday, Tata Power would call an extraordinary general meeting (EGM) to seek Mistry’s ouster as a director of the company. TCS, Tata Steel, Tata Chemicals, Indian Hotels and Tata Motors have already called EGMs in December. 

Prominent chartered accountant Nawshir H Mirza, who’s known for his involvement in corporate governance, is among the directors on the board of Tata Power, who’s likely to make things stormy tomorrow. Mirza could speak openly against the way Mistry was removed from the Tata Sons board, sources indicated.

Homiar S Vachha, former top executive at ICICI, too is expected to back Mistry. Anjali Bansal, senior advisor to private equity player TPG, Vibha Padalkar, a senior HDFC executive, and Sanjay Bhandarkar, former managing director of Rothschild India — all three hired days before Mistry was removed as chairman of Tata Sons — are unlikely to go against Mistry.

The other independent directors are Deepak M Satwalekar, former top executive at HDFC, and Ashok Basu, former steel and power secretary. Apart from the seven independent directors, the Tata Power board has five more directors including Mistry, Pravin Kutumbe, an LIC nominee, Sandhya S Kudtarkar, a Tata Group employee, Anil Sardana, chief executive officer and managing director of Tata Power, and Ashok S Sethi, chief operating officer and executive director of Tata Power.

Even as the board meet outcome may not change things materially in the biggest corporate battle in recent times, it has its psychological impact on investors and shareholders. 

Tata Power is considered extremely significant in the group portfolio. It is India’s largest integrated power producer with a capacity of 10,477 megawatt capacity and power distribution licences in Mumbai and Delhi. The company’s real estate cuts across states — from Maharashtra to Gujarat, Odisha, West Bengal, Jharkhand and Karnataka, among others making it an asset. In his letter to Tata Sons directors soon after his ouster, Mistry had talked about how Mundra power project was staring at huge losses due to bad coal acquisitions in Indonesia by Ratan Tata.  

Tata Sons held a 31.05% stake in Tata Power and the total promoter holding was 33% as of end of September. The company’s consolidated debt stood at Rs 38,665 crore at the end of March 2016.