No plans to eject Mistry from Indian Hotels

Independent directors to discuss issues raised by Mistry on Friday

Senior independent directors on the board of Indian Hotels are planning to discuss the acquisitions made by the previous management led by former chairman and current Interim Chairman Ratan Tata in the crucial Indian Hotels board meeting to be held in Mumbai on Friday. The removal of Cyrus Mistry as chairman of Indian Hotels is not on the agenda, and the board meeting is to consider the July-September 2016 quarter results.

In a scathing letter last week, former Tata Sons Chairman Mistry had said the group had made several bad acquisitions across group companies including Indian Hotels that could result in potential write-downs of $18 billion for the group.

A director on the board of Indian Hotels said senior directors, led by HDFC Chairman Deepak Parekh and former Hindustan Unilever chairman Keki Dadiseth, are likely to discuss the issues raised by Mistry.

Both directors have an impeccable track record and command respect from both the Tata and Mistry camps. “We will certainly raise the issue and frankly, this is something I have seen for the first time in my life,” a director on the board of Indian Hotels said, asking not to be quoted. “Cyrus has a good track record in solving the legacy issues at Tatas and has done a good job,” said he.

Shapoor Mistry, elder brother of Cyrus and director on the Indian Hotels board, will also attend the meeting. “Shapoor is not happy with the way the entire matter was handled by Tata. He is supporting his brother to the hilt,” said a source close to the development.

Mistry will not resign from any group companies where he is the chairman and is ready for legal battle with Tatas — if need be, a family source said. Mistry is currently chairman of all top-listed firms. Tata Sons stake in these companies is low while the institutional/small shareholders are owning the rest. The Shapoorji Pallonji family owns 18.5 per cent in the Tata group holding company, Tata Sons. Tata Sons, in turn, holds 39 per cent stake in Indian Hotels.

Soon after his exit from Tata Sons, Mistry had said Indian Hotels or IHCL had acquired the SeaRock property in Mumbai at a highly inflated price and housed it in an off-balance sheet structure. “In the process of unravelling this legacy, IHCL has had to write down nearly its entire net worth over the past three years. This impairs its ability to pay dividends,” Mistry had written in a letter to Tata Sons’ directors and trustees a day after he was removed.  “Many foreign properties of IHCL and holdings in Orient Hotels have been sold at a loss. The onerous terms of the lease for Pierre in New York are such that it would make it a challenge to exit,” Mistry said.

In his letter to employees, Ratan Tata said the removal of Mistry from Tata Sons was absolutely necessary for the future success of the Tata group.

In its response to the stock exchanges on Mistry’s charges, Indian Hotels said all its reports and financial statements present a true and fair view of the state of affairs of the company and the company has disclosed all material facts as required under applicable law.

Indian Hotels shares, meanwhile, have lost 16 per cent of their value, or Rs 2,000 crore, since October 24 when Mistry was ousted from Tata Sons. The stock closed at Rs 109 on Thursday as jittery investors sold its shares.