MUMBAI: The ongoing tussle between Tata Sons and Cyrus Mistry escalated further on Thursday after Tata Consultancy Services (TCS), India’s largest software services firm by revenue ousted Mr Mistry as chairman. The software major appointed Ishaat Hussain, as the new chairman who will hold office until a new chairman is appointed. Mr Hussain, who has a long association with the Tata group, is currently a member on the board of TCS.
In a filing with the stock exchanges, TCS said, “The company has received a letter dated November 9, 2016 from Tata Sons Ltd nominating Mr Ishaat Hussain as the chairman of the board of directors of the company in place of Mr Cyrus P. Mistry with immediate effect. In view of this, Mr Mistry has ceased to be the chairman of the board of directors of the company and Mr Hussain is the new chairman of the company”.
Tata Sons has also issued a special notice for convening an extraordinary general meeting of shareholders of the company seeking the the removal of Mr Mistry as director of the company. Meanwhile, Indian Hotel Company Ltd (IHCL) informed that Tata Sons has called a similar meeting of shareholders for the removal of Mr Mistry as the director of the company. Tata Sons holds 28.01 per cent stake in IHCL. The move comes just days after the independent directors on the board of IHCL had expr-essed their complete faith in Mr Mistry’s leadership.
Reacting strongly to TCS move, the Mistry camp said the ‘cloak and dagger machinations’ with little regard to due process of law has come to define the angry strategy of the Ratan Tata camp. “Tata Sons had asked TCS yesterday (Novemb-er 9) that it would like Mistry replaced by Hussain — it made a nomination. TCS had to then convene a board meeting and table the nomination at the board at a meeting or through a circular resolution. Nothing of this nature was done. In premediated haste, by a letter of the same date, TCS has directly gone on to announce that Mr Mistry stands replaced,” said a source close to Mr Mistry.
In a related development, the independent directors of Tata Chemicals held a separate meeting and affirmed their faith in the current Mistry-led management. “The independent directors unanimously affirmed their confidence in the board, its chairman and the management in the conduct of the company’s business,” Tata Chemicals said in a statement sent to stock exchanges.
‘Tata firms lost under Mistry':
Addressing the concerns raised by various stakeholders following the ouster of Cyrus Mistry as the chairman of Tata Sons on Thursday said that the performance of its group companies — barring TCS and JLR — deteriorated under Mr Mistry’s watch. Justifying its decision to remove Mr Mistry, Tata Sons in a nine-page letter pointed out that the profits of group companies declined materially during the last four years while the total debt of the group piled up during his tenure.
According to it, there was also a perilous drop in market share in both passenger cars and commercial vehicle segment. “Mr Mistry has been indicating that companies have performed well during his four-year term but the figure quoted by him always refers to the total of the group companies including TCS and JLR which acc-ount for over 90 per cent of the group’s profits. Since he hardly contributed to the management of these two companies, it would be more relevant to look at the totals of the rest of the group which will show that the profits of the rest of the group in fact declined during his four-year tenure,” it claimed.
