Amidst escalating stand-off between Ratan Tata and his estranged successor, group firm Tata Global Beverages on Tuesdayreplaced Cyrus Mistry with group veteran Harish Bhat as its chairman. This is the second Tata group firm where Mistry has been removed from the post of chairman since he was ousted as the chairman of group holding firm Tata Sons on October 24.
On November 10, group’s crown jewel Tata Consultancy Services replaced Mistry with another group veteran Ishaat Hussain as interim chairman. “After extensive deliberations, and keeping in view the long-term interest and alignment of all stakeholders and stability of the company, the board of directors resolved to replace Mistry as chairman of the company, by majority vote, with seven out of the 10 directors present at the board meeting, voting in favour of the resolution,” said the company in a statement to the stock exchanges. “The board of directors also appointed Harish Bhat, a non-executive director of the company, as the chairman of the company,” it informed.
Mistry, however, challenged the move and termed it illegal. “The developments at the board meeting of the Tata Global Beverages are nothing but a repeat of the illegality that the board of directors of Tata Sons did on October 24. There was nothing on the agenda about replacement of the chairman just as there was nothing in the Tata Sons board agenda on October 24,” said a statement issued from his office following the board meet of the company called to discuss its quarterly result.
Two independent directors Darius Pandole and Analjit Singh opposed the bid at committing these illegal acts said the statement. “The Tatas continue to demonstrate the lack of respect for due process of law that they have displayed,” it said.
Describing the proceedings of the board meet, the statement said, Harish Bhat, an employee of Tata Sons proposed that S K Santhanakrishnan be made chairman. This proposal was ruled out since Mistry was the chairman for the meeting. When the proposal to remove Mistry was sought to be moved, it was ruled out by the chairman since it was not on the agenda. The meeting was conducted by Mistry as chairman and was concluded. “The statement made to stock exchanges today is therefore inaccurate and illegal and it is but a repeat of exactly the same illegal acts done by Tata Sons on October 24,” Mistry’s office stated.
Mistry remains on the company’s board as a director despite being removed as chairman. To remove him from the board, the company will need to call an extraordinary general meeting (EGM). Mistry continues to remain chairman on the boards at Indian Hotels Company, Tata Chemicals, Tata Steel and Tata Motors. Tata Sons has requested for EGMs to remove Mistry as a director at Tata Chemicals, Tata Steel and Tata Motors.
“With this, the focus would now shift to the forthcoming EGMs for these companies where Tata will have to seek shareholders’ support to oust Mistry from companies’ boards,” said a person familiar with the developments.
Investors have lost about 14% of value in Tata group firms with the value of 26 listed firms of the group coming down by 14% to Rs 7.5-lakh crore since the ouster of Mistry as Tata Sons’ chairman. Tata Motors lost nearly 10% on Tuesday following the board meeting of the company on Monday which also announced widening of company’s net loss to Rs 631 crore in September quarter.