Cyrus Mistry, the ousted Tata Group chairman who quit as a director from various Tata companies, may have lost the battle against Ratan Tata and the Tata Group, but he hasn’t lost the war he started after his unceremonious ouster two months back. He has vowed to see this war to its bitter end. Mr Mistry is obviously hurt and humiliated at the way he was thrown out, literally in a boardroom coup, and has now opened a can of worms, that could spell trouble for Mr Tata and his group if the government and the Securities and Exchange Board of India decide to look into the serious allegations made by Mr Mistry. They range from governance issues in various companies to insider trading, with no firewalls between the Tata Trusts and the Tata companies.
So far the government, which has problems of its own following the chaos caused by its demonitisation move, hasn’t taken any view on these allegations. Mr Tata met Prime Minister Narendra Modi and finance minister Arun Jaitley as soon as the war of words started after Mr Mistry’s ouster. Mr Mistry claimed his main agenda was to restore the values and ethical standards the group was known for. What is inexplicable is why Mr Mistry, who has now moved the National Company Law Tribunal against the Tata Group, had not approached the tribunal in the first place. It could be that he overestimated his influence in the group and bowed out only when he realised his calculations had gone wrong.
Tata Sons, with its majority or significant shareholding in various companies, wields a lot of clout. In comparison the Mistry group only has about 19 per cent shareholding in the group, that makes it the largest single shareholder. It does not help in a battle against Tata Sons. The group companies have lost '77 crores in market capitalisation since Mr Mistry decided to wash the group’s dirty linen through the media after his ouster on October 24. He dropped a bombshell when he revealed that the group was sitting on a $18 billion potential writedown. All the listed Tata companies, with the exception of Tata Elexis, have been victims of this battle. Mr Mistry has a formidable ally in Nusli Wadia, who was a director in several Tata companies and used to be a close friend of J.R.D. Tata, the group’s patriarch. He has even filed a Rs 3,000-crore defamation suit against the Tata directors and Mr Tata for allegations that Mr Mistry and he were trying to take over Indian Hotels. So one can expect that this fight will get even more vicious and long-drawn-out than Mr Wadia’s earlier battle with Dhirubhai Ambani decades ago.
