 "Ratan Tata arrives at Tata group's head office Bombay House in Mumba")
While Ratan Tata followed up the sacking of Tata Sons Chairman Cyrus Mistry by inducting two new directors into the board of the holding company, the now ousted former chairman has reportedly criticised the boardroam coup in an email and termed the move as shocking and unparalleled in the annals of corporate history.
Mistry says sacking illegal
Mistry says sacking illegal
According to the letter published by the Economic Times, Mistry has not only described the board proceedings as invalid and illegal but also alleged that he had not been given any free hand despite being assured of the same by Ratan Tata before he accepted the top job.
Mistry alleges he had no freedom to do his job
Mistry alleges he had no freedom to do his job
Mistry alleged that after he was appointed as chairman, Tata Trusts amended the articles of association which constrained him to do his job
"The directors nominated by the trust (Nitin Nohria and Vijay Singh) had been reduced to “mere postmen," Mistry further alleged, according to the Economic Times.
The former chairman also explained reasoning and results of events that took place under his leadership
Barring JLR and Tetley, Mistry said Tatas' foreign acquisition strategy resulted in a massive debt overhang while Indian Hotel's acquisition of the Sea Rock property in Mumbai pushed the company to write down nearly its entire net worth over the past 3 years. Mistry also stated that Tatas foray into aviation through joint ventures with Air Asia and Singapore Airlines was at fair accompli at the behest of Ratan Tata.
"The directors nominated by the trust (Nitin Nohria and Vijay Singh) had been reduced to “mere postmen," Mistry further alleged, according to the Economic Times.
The former chairman also explained reasoning and results of events that took place under his leadership
Barring JLR and Tetley, Mistry said Tatas' foreign acquisition strategy resulted in a massive debt overhang while Indian Hotel's acquisition of the Sea Rock property in Mumbai pushed the company to write down nearly its entire net worth over the past 3 years. Mistry also stated that Tatas foray into aviation through joint ventures with Air Asia and Singapore Airlines was at fair accompli at the behest of Ratan Tata.
Tata Trusts unhappy with Mistry's decisions as chairman
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Several reports following Mistry's ouster suggest the influential Tata family, which owns a majority stake in Tata Sons through a series of trusts, was unhappy with some of his decisions as chairman. Both Ratan Tata and the Tata Trust were reportedly kept in the dark on a number of sensitive issues, and attempts to sell Tata Steel's UK business and an aggressive stand against Japan's NTT DoCoMo in a teleservices dispute proved "the last straw".
Sagging financials a concern
VR Mehta, a trustee of the charitable trusts that own the Tata Group, told NDTV that Tata Group's sagging financials as well asa growing divergence over values and ethics, were the key reason behind the removal of Cyrus Mistry. "Mehta said that under Mr Mistry's watch the entire group was dependent on only two companies - Tata Consultancy Services and JLR (Jaguar Land Rover).He said this meant a downsizing of the philanthropic activities of the trusts, unacceptable to them," the NDTV report said.
In essence, the trusts were worried about falling revenue and funds for charitable work drying up.
Mistry's move to sell group assets to reduce debt was another factor
Tata Sons was perhaps unhappy with Mistry's approach of shedding non-profit businesses, especially the conglomerate's steel business in Europe, and concentrating only on cash cows
Even lawyer Harish Salve, who is a legal expert for Tata Sons, told NDTV that the "group felt its formidable international reputation was being compromised".
Did Tatas seek legal opinion before ousting Mistry?
Tata Group reportedly sought legal opinion before deciding to replace Cyrus Mistry as the chairman. Various media reports suggest that Tata Group sought the legal advise of emminent lawyers like Mohan Parasaran, Justice Raveendran and P Chidambaram before taking the decision.
Lawyer Mohan Parasaran, who has advised the Tata Group on the Mistry issue, said Ratan Tata had met Mistry before the board meeting on Monday and had asked him to quit. " I said the board was competent to appoint chairman following their articles of association. They will need to appoint a selection committee. But there's no need of a selection committee for the removal. For that, a majority of directors is needed," Parasaran was quoted as saying by NDTV.
Caveats against Mistry
A day after board's dramatic decision, the Group also moved various legal forums including Supreme Court, High Court and the National Company Law Tribunal filing caveats against Mistry moving courts seeking relief against the sacking.
Mistry's office issued a statement saying, "A caveat is a notice filed by a party fearing legal action seeking notice before action. Tatas have filed caveats seeking notice from Cyrus Mistry fearing legal action. Cyrus has not filed any caveats. He has already made a statement that such concerns are misplaced at this stage."
Mistry is likely to come to Delhi by Thursday and excepted to meet several political leaders in the capital.
Mistry is likely to come to Delhi by Thursday and excepted to meet several political leaders in the capital.
New Selection Committee in place
The Tata board has constituted a selection committee to choose a new Chairman for Tata Sons, comprising Ratan N Tata, Venu Srinivasan, Amit Chandra, Ronen Sen and Lord Kumar Bhattacharyya.
