Mistry says no chance of truce, vows to 'fight' it out

Ousted Tata Group Chairman Cyrus Mistry today ruled out chances of a truce with Ratan Tata, claiming his fight is for larger issue of governance and that he will slug it out without giving up his family's 18.5 per cent holding in the USD 103-billion conglomerate.
"I will fight for that. I have fought for that... We have been there for 50 years, its not one day or two days," Mistry said a day after he quit from the boards of six listed Tata companies and declared he will take his battle against Tatas to courts.
"This is not about a business group fight. It is not about those type of things. If that was the situation, I would like to sit in the position. That's why I have removed myself from the position, because it is not me looking for position or power," Mistry told PTI in an interview.

He replied in negative when asked specifically if his family will exit its ownership in Tata Sons, the holding company of the country's biggest conglomerate, if he loses his fight in the courts.
Mistry family's 18.4 per cent holding in Tata Sons is valued at close to Rs 1 trillion and is the single largest non-promoter group investor for over five decades.
Mistry surprised all by resigning from all six key Tata group companies yesterday, even before the EGMs of some firms where shareholders were to vote on Tata Sons' proposal to oust him from directorship.

When asked if there is a chance of smoking the peace pipe, Mistry sought to distinguish his fight from feuds in India Inc's families, saying he is fighting for larger issues like ethics and governance at what is arguably one of the most revered conglomerates.

"This is about governance and reforms. If governance reforms happen, I benefit, I am not saying no to that," Mistry said.
The 48-year-old Mistry also ruled out demanding more board positions at Tata Sons. He continues to be the lone family representative on the board at present and has ruled out giving up on it.
"I am not looking for board positions. I am looking for good governance. We will see what happens in the future," said Mistry, who was the first Chairman from a non-Tata family at the 149-year salt-to-software giant.
Mistry, who blames attempts to expose wrongdoings on the governance and ethics front for his removal, said Tatas are at an "inflection point" and there is a need to institutionalise processes to future-proof the business and feared that it would go down a "slippery slope" if action is not taken.

Ahead of the crucial extra-ordinary meetings of
shareholders that began today, Mistry after attending a board meeting of Tata Sons last evening had announced that he was "removing himself from the EGMs" to end to the uncertainty plaguing the group companies since his sacking on October 24.
While Indian Hotels EGM took place today, some other key companies like Tata Motors, Tata Steel, Tata Power and Tata Chemicals will hold their shareholder meets through next Monday on the proposal for removing Mistry as director. Non- promoter shareholders own more than 55 per cent on average in these listed firms.
The EGMs have also been called to remove Wadia group chairman Nusli Wadia from three of the Tata Group companies as independent director -- Tata Motors (for 37 years), Tata Steel (35 years), and Tata Chemicals (15 years).

Replying to investors' ire on value erosion due to his actions, Mistry said "convenience" of outcomes cannot drive actions always and there is a need to stand up to what is right.
"At the end of the day, everybody has to take the right decisions for the right reasons. I think when you take decisions, you should take them not on the basis of what you believe is a convenient outcome, but what you believe is the right outcome," he said, adding, "If we all wanted to sweep things under the carpet, we would not take any decisions."
Mistry said it was his actions on the governance and ethical front which made the Tatas nervous and might have led to his sudden dismissal and added that even before his dismissal at the October 24 meeting, the Tata Sons board discussed his proposal on streamlining governance.

Mistry said actions and discussions on shortcomings on
both the counts had been initiated much before he was dismissed, and specifically pointed out to the Air Asia India and billionaire C Sivasankaran episodes as cases, which he said unnerved the old guard at Bombay House.
Mistry reiterated that discussions at Tata Sons about making Sivasankaran pay his share of the DoCoMo put option leaked out and wondered how the billionaire investor close to Ratan Tata sent a notice to the group within days.
"Within two or four days of us discussing at the board meeting, rather than us recovering the money, he (Siva) puts a claim on us. That is absolute nonsense, very frankly," he said.

Mistry wondered how the group entered the aviation business in two ventures when everybody else was making losses, but said he went by his predecessor Ratan Tata's judgement as he did not have any experience in the sector.
On Air Asia India, he asked why more funds were committed to the venture at the November board meet of Tata Sons without taking necessary action on a forensic audit which established a Rs 22 crore fraud in the carrier.
When asked for timelines on discovering of what he terms as "malafide" practices, Mistry hinted he came to know about much of it after taking over the reins.

It can be noted that he had been on board of Tata Sons since 2006 before taking over chairmanship in December 2012.
He justified it saying being the only "non-Tata group" person on the board, he was not in the know of various aspects.
(REOPEN DEL44)
Following is the transcript of exclusive interview of
Cyrus Mistry
Q: What went wrong between you and Ratan Tata? Is it some personal issue which led to the Oct 24 development? You have not spoken about it at all?
A: I think October 24 was action taken by Mr Tata and the board under his this thing (leadership). My views can only be an analysis of what is in his mind because I did not crystallise the actions. I am now sitting and reflecting eight weeks from then, saying what could have been the reasons which went wrong and what were those? Those were two areas where I was very clear that we needed reform. One of them is in the governance area particularly and that was the discussions that were going on. We had multiple discussions on governance and on the day that I was removed, there was actually a tabled draft note for understanding what is corporate governance in terms of roles of Tata Trusts, Tata Sons board and the operating company boards. How does that interface work and that was not only tabled that day, it was being discussed from much before.

As you see, there was another (reason). That was on the ethics side. The board meeting before the last one (in Sept) I had raised the issue of collecting our money from Sivasankaran. It is very clear that Mr Sivasankaran is very close to Mr Tata, I think that is part of history. There are some questionable transactions which have happened over time which have been reported in the newspapers and effectively we need to recover a significant amount of money that we are talking about, over Rs 650 crore.
Q: The companies say they have collaterals for that.
A: That was originally, when there were Rs 250 crore...This is the last meeting. Originally before that Rs 200 crore was given as loan to Mr Sivasankaran, he gave shares which effectively he valued at a high price of TTSL. The company has written off those... Tata Capital did an adjustment against those shares and no payment was made against those shares.

That is largely written off by Tata Capital, even that information was given selectively outside. There was no pre- payment against that. The shares are TTSL shares and we know very frankly, what the situation of TTSL is. This is separate, this is against the Docomo put-option, where he had also signed an agreement where he had to give his shares against the Docomo put-option which was discussed at the (Tata Sons board) meeting on September 15. Within two or four days of us discussing at the board meeting, rather than us recovering the money, he puts a claim on us. That is absolute nonsense, very frankly.

The second one is on Air Asia. On the day I was removed, we had tabled a summary of the forensics report which showed that there was a fraud in the company. Eight weeks have gone by, actually the report was with the company even before that. No concrete steps have been taken in terms of fixing the blame. And now eight weeks have gone. Again showing that there is no action. In the next board meeting, they funded it. They put much more money into the company.
Q: When did you actually come to know about what you call malafide practices both on ethics and governance side? You were a director on Tata Sons much before you took over chairmanship.

A: When I was a director of Tata Sons, clearly I was one of the few directors who were from outside of the group. Therefore, there is no question of knowing any of these things when I was a director from outside. I was chairman for more than three years. During my watch as the chairman, my aim was that no malafides can happen under me. If anything malafide was happening, I would put in a due process to make sure that it would not happen. All transactions with Siva happened much before my took over, whatever happened with Air Asia, as it came to my knowledge I bought it to the knowledge of the board.

Q: Can it legally stand that Air Asia was thrust on you?
A: I am not saying from a legal point of view. I am saying from the point of view of good governance. When you look at good governance, you also need to look at how you approach the subject. When you go for two airline ventures in a short span and in a space where effectively everybody is losing their money at that point in time, and what I have documented with the board is that these ventures are on the basis of...Because I do not have the experience in the aviation business, so I have gone on the basis of Mr Tata's judgement. These are not illegal acts, but these are not in the best form of corporate governance and the question mark is if you look at all these acts together, one can say that these are not legal acts. If you look at them in isolation, questions do come up.

Q: You have been invoking the need to protect the Tata brand, but your actions --- not resignations per se, but protracted battles ahead. Shareholders are saying whatever you are doing publicly stating will have a debilitating impact on the brand.
Q: End of the day, you drag the group to the court.
A: Nirmalya Kumar (close confidante of Mistry who was also sacked by Tata Sons): The important thing here is that if you do not clean up, you won't be stronger in the long run.
Cyrus Mistry: Today, if you have a situation where the Trusts will go into the wrong hands and wrong governance happens, what will happen to the companies? That is where today Tatas is. That is what I am pointing out to all of you. If wrong decisions, both from a governance perspective and ethics, happen, this is a slippery slope that we will go down. Unless and until you recognise this, you will not take the right decisions.

Q: Report said you have written to the government for doing away with the exceptions made to Tata Trusts to own more than 1 per cent in listed companies and get Tata Trusts get listed itself.
A: I have not done any comment like that, that is not my comment.
Q: What is the solution otherwise?
A: Many institutions go through a phase where they actually...This is an inflection point of this institution. When an institution goes through an inflection point, it has to institutionalise itself. That institutionalisation requires governance to be put in place, governance processes. For example, how do you look at succession planning? How do you ensure that the most competent person can be a family member or an outside member...Today, 600,000 employees depend on that person. You have not one person, but it has to be an institution. How do you create that frameworks? Or are we going to leave that situation to the whims and fancies of one person?

Q: If at all we get an outsider, the chairman of the Trusts will finally control them?
A: Let us look at international institutions and trusts. Trusts have a certain roles and unless you define what their roles are, what is it that they control? Are they controlling the day-to-day operations? If you do that, then what is Tata Sons for? What are the operative companies for? Effectively, you need to have clarity on the roles of different
players inside a structure. That is the governance framework. Thats a very big difference. It is not a 'Lalabhai company' where we can say that there is one person and he is going to control everything.

Nirmalya Kumar: People can say at IHCL or Timbaktoo that he is causing loss of shareholders value. It is like saying I got slapped and you should not do anything, because you might hurt me. I am sorry.
Cyrus Mistry: Shareholder value gets lost when things are done illegally, when corporate governance is not adhered to, when cohesive action is not taken. Have I taken any one of those? I have not done any one of those. I think that is important to understand.
Q: The group survived Radia tapes and many others. Now this. When it comes to corporate governance and ethics does this cause more harm when you take immense pride on being ethical and values?

A: What I am bringing to the fore is that we need to put the process where we live up to those values. We do not only project values without living up because if you don't do that now, you will not...
Q: Social media comments say you are protecting your own commercial interests in the name of protecting their interests.
A: Let us not confuse. Should I not protect my interests? Should I not protect my interest in the right way? There is a difference. Have I protected my personal interest by asking for position? I have not asked. Consistently! Have I protected the interests of the shareholders, whether those shareholders are of operative companies or of the Trusts? Yes I will do that. I don't see why I shouldn't do it. I think there is a very big difference.

Q: Are you discounting any chances of a truce, like industrial families have done?
A: This is not about a business group fight. It is not about those type of things. If that was the situation, I would like to sit in the position. That is why I am removing myself from the position, because it is not me looking for position or power. This is about governance and reform. If governance reform happens, I benefit, I am not saying no.
Q: If you lose the battle, will you quit the Tatas?
A: I will fight for that. I have fought for that...We have been there for 50 years, it's not one day or two days.

Q: Will you seek more board positions to assert your rights?
A: I am not looking for board positions, I am looking for good governance. We will see what happens in the future.