In a move that surprised many, Cyrus Mistry was sacked as the Chairman of the Tata Sons on October 24, nearly four years after he took over the reins of the over USD 100 billion salt-to-software conglomerate. The decision was taken at a Board meeting held in Mumbai. Ratan Tata has been appointed as interim Chairman for four months during which a search committee will look for a replacement.
Cyrus Mistry joined the board of Shapoorji Pallonji & Co Ltd as director in 1991 and was appointed the managing director, Shapoorji Pallonji Group, in 1994. Shapoorji Pallonji has the single largest shareholder with 18.4 per cent stake in Tata Sons – the holding company of Tata Group.
A look at the series of events that followed Cyrus Mistry’s sacking by Tata:
October 24: Industrial conglomerate Tata Sons replaced Cyrus P Mistry as its Chairman and named Ratan N Tata as the interim chairman of the company.
October 24: An unnamed member of the Tata Sons board had reportedly told NDTV that the removal of chairman Cyrus Mistry was in consideration for many months. This suggests that the removal was based on Mistry’s performance.
October 24: Former Solicitor General Mohan Parasaran confirmed to The Indian Express that the group had sought legal opinion a month ago on “issues relating to management”. “He was replaced due to management issues,” Parasaran said.
October 24: The removal of Cyrus Mistry cannot be termed as illegal, according to proxy advisory firms. “The removal of Mistry with a majority of board members voting against him is not illegal as the chairman is elected by the board and can be elected for every meeting. Under Section 173 of the Companies Act a seven-day notice should be given, however, this notice is waived if at least one independent director is present in the board meeting or if the decision is ratified by majority of directors,” said JN Gupta, managing director of Stakeholders Empowerment Services (SES).
October 24: Taking over as the interim Chairman of the Tata Sons after the sacking of Cyrus Mistry, Ratan Tata wrote to Prime Minister Narendra Modi informing change in the top management of Tata Group.
October 25: Shapoorji Pallonji said it is studying the “circumstances” and has not yet decided on taking legal recourse. “Neither the SP Group nor Mr Cyrus Mistry have made any statement yet. While the circumstances are being studied, there is no basis to media speculation about litigation at this stage. As and when a public statement becomes necessary, it would be made,” the construction group said in an emailed statement.
October 25: Tata group filed caveats in Supreme Court, Bombay High Court and National Company Law Tribunal to prevent ousted Tata Sons Chairman Cyrus Mistry from getting an ex-parte order against his sacking. According to sources, the Tatas don’t want any court to pass any ex-parte orders without hearing their side of the story. “They have pleaded to be heard before the court passes any interim order like stay on Mistry’s sacking,” a source said.
However, the Cyrus Mistry camp said they have not moved the court against the decision of the Tata Sons board. “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 caveat. He has already made a statement that such concerns are misplaced at this stage,” an official statement from Cyrus Mistry said. While Tata Sons has appointed law firm Shardul Amarchand Mangaldas and Karanjawala & Co to advise them, Mistry has approached Desai & Diwanji for legal advice.
October 25: Interim Chairman Ratan Tata had asked senior management of the conglomerate’s firms to focus on their businesses without being concerned about the top level change.
October 25: Ralf Speth, CEO of Jaguar Land Rover, and N Chandrasekaran, CEO & Managing Director of Tata Consultancy Services (TCS), were appointed as Additional Directors on the Tata Sons Board.
October 26: Stocks of listed Tata group companies fell by up to 3.16 per cent on the stock exchanges after Cyrus Mistry was removed as chairman of Tata Sons. The market capitalisation — or the market value of listed shares — of top listed Tata companies lost close to Rs 10,877 crore.
October 26: Cyrus Mistry shot an email to Tata board members, protesting against his removal as chairman of Tata Sons, according to NDTV reports. The contents of the mail, which have not been made public, reportedly accuses the board of not giving Cyrus a chance to defend himself. “The board has not covered itself with glory,” Mistry reportedly wrote in the email, adding that the board “never gave me a chance to defend myself.” Terming the move by the Tata Sons board as unprecedented, Mistry wrote that he was “shocked at the manner of his removal”.
October 26: Cyrus Mistry in a letter to Tata directors said he was shocked by the decision as he could not believe he was removed on grounds of non-performance. In the letter, which was accessed by CNBC TV-18, Mistry made some serious revelation of the functioning of Tata Sons and said his removal “without explanation is unique in the annals of corporate history. ”
“Lack of explanation has led to all manners of speculation and harmed mine as well as Tata Group’s reputation,” wrote Mistry in the five-page letter. Mistry mentioned that the forensic probe had revealed fraudulent transactions worth Rs 22 crore in AirAsia. “I had made my objection known on the airline venture (AirAsia).” he wrote adding “I was pushed into the position of a ‘Lame Duck’ Chairman.” He also disclosed that Tata’s nano project was a burden on company and only emotional reasons have kept it from closing the project. He said that Nano has consistently lost money. “Any turnaround plan for Tata Nano required Tata Motors to shut it down,” reads the letter. He also advised Tata against the aggressive bid for Mundra project as it carries the risk of considerable impairment.
October 26: Markets regulator Sebi began looking into the Tata-Mistry case for any possible breach of corporate governance norms and listing regulations at various listed companies of the over USD 100 billion conglomerate. Besides, stock exchanges, sought clarification from many of the group’s listed companies on the purported disclosure by ousted Chairman Cyrus Mistry about Rs 1.18 lakh crore possible write down at the group firms.
“We (Sebi) are taking note of each and every development and will act immediately on any hint of possible violation of corporate governance and listing norms or any other regulation under our jurisdiction,” a senior official said. The Securities and Exchange Board of India (Sebi) is looking into the alleged disclosure made in the purported letter written by Mistry to Tata Sons’ board members including about financial and other irregularities as also lapses on the corporate governance front, sources said.
The stock exchanges and the regulator are also keeping a close watch on the price movement and trading activities of over two dozen listed companies of Tata group, which have seen an erosion in value in last two trading sessions after the surprise ouster of Mistry in less than four years of being made chairman of Tata Sons, the main holding company of the group.
October 27: Shares of various Tata group stocks, including Tata Power and Tata Motors, plunged sharply. Tata Motors and Tata Power were down nearly three per cent each while Tata Steel was trading nearly 2 per cent down in early morning trade at BSE.
October 27: In a statement, Tata Sons said that it is unfortunate that Mistry is making all the allegations and misrepresenting facts about business decisions which he was party to for over a decade in different capacities. The company said response to Mistry’s allegations will be given in an appropriate manner. The company said, “The tenure of the former Chairman was marked by repeated departures from the culture and ethos of the group.
Tata Sons also rubbished the reports of the exit of Rakesh Sarna, Managing Director and CEO of Taj Hotels Resorts and Palaces, as completely baseless and unfounded. Tata Sons regretted that “a communication marked confidential to Tata Sons board members has been made public in an unseemly and undignified manner”.
“This is not a group of people who one would expect to act without exercising proper judgement in the best interests of the entities they sit on the boards of. The factors which go to making loss of confidence are obviously diverse and serious and include economic, corporate, managerial, moral and ethical issues. But even courts do not tread into the review of such causes. Hence, the press should desist from speculative misadventure.”
October 27: The Aviation Ministry said all issues would be looked into and “law of the land will have to be followed” in case of any violation. “Laws as per policies have to be followed. Whatever (issue) anybody raises, they will have to be looked into,” Civil Aviation Minister Ashok Gajapathi Raju told reporters. The comments came a day after Mistry’s allegations, contained in a confidential letter dated October 25, became public wherein he wrote about certain financial irregularities regarding AirAsia India, where Tatas are a partner, including a “fraudulent transaction” of Rs 22 crore.
October 27: Top officials of Tata Steel met analysts, fund managers and financial institutions to assure them that it is business as usual in the $103-billion group. LIC alone has investments aggregating close to Rs 36,000 crore in various Tata companies.
October 28: Tata Group is examining at least two internal candidates as successor to ousted Chairman Cyrus Mistry, according to people familiar with the matter. Tata Consultancy Services Ltd. Chief Executive Officer N. Chandrasekaran and Jaguar Land Rover head Ralf Speth are among those being considered, the people said, asking not to be identified because the process is private. Trent Ltd. Chairman Noel Tata, a member of the founding family and Mistry’s brother in law, is also being considered, one of the people said. The preliminary list is subject to change, according to the people, as the search committee has four months to identify a replacement.
October 28: Tata Steel said it continued to pursue European consolidation strategy and is in talks with Thyssenkrupp AG for potential JV for European steel business, following purported disclosure from ousted chairman Cyrus Mistry that some group firms could face a potential writedown of USD 18 billion. “In response to the recent media reports, Tata Steel would like to clarify that it continues to pursue its European consolidation strategy and the talks with thyssenkrupp AG (as announced on July 8, 2016) for a potential joint venture of its European steel business are currently ongoing and progressing,” Tata Steel said in a BSE filing.
October 28: Stepping up his attack on the Tata Group in general and Ratan Tata in particular, ousted chairman Cyrus Mistry denied group’s claim that the board was not properly consulted on Tata Power’s purchase of Welpsun Power in June. “It is surprising that Ratan Tata has sought to justify Monday’s conduct by making vague public statements that are contrary to his knowledge and contrary to the records of the Tata Group. Tata sources said the trustees of Tata Trusts were not kept informed about the transaction with Welspun Power,” Mistry said.
October 28: Tata Capital Financial Services on Friday said secured term loans to Siva Industries and Holdings Ltd (SIHL) and Siva Ventures Ltd (SVL) aggregating Rs 200 crore were sanctioned by the investment panel of its Board and due processes were followed, refuting the allegation of former Tata Sons chairman Cyrus Mistry that the loan was given on the “strong advice” of an executive trustee.
This loan facility was sanctioned by the Investment Credit Committee of the Board, Tata Capital said. “Due internal processes as applicable for sanctions of loans of such nature and value were followed. The facility had a security cover significantly in excess of the loans granted and was backed by a personal guarantee of C Sivasankaran. The facility was settled in June 2014 and due disclosures were made in the audited financial statements of the company,” it said.
October 28: Cyrus Mistry stated that he was surprised with reasons given by the Indian conglomerate for his dismissal. “It is surprising that Mr. Tata has sought to justify Monday’s conduct by making vague public statements that are contrary to his knowledge and contrary to the records of the Tata Group,” said Mistry in a response issued late on Friday. The company has not fully explained its justification for his dismissal, and its statement on Thursday only said that Mistry’s tenure “was marked by repeated departures from the culture and ethos of the group”.
October 29: Tata Group’s Human Resources chief N S Rajan has put in his papers. Rajan, who held the position of Tata Group’s chief of human resources (CHRO), was one of the members of the now disbanded Group Executive Council (GEC) set up by Mistry. He put in his papers on Saturday, sources said.
For all the latest India News, download Indian Express App nowFirst Published on: October 29, 2016 7:57 pm