The board of Tata Steel has ousted Cyrus Mistry as chairman of the company and brought in former State Bank of India chairman, OP Bhatt as the interim chairman till the extraordinary general meeting on December 21. According to officials, six directors of the company supported the resolution for the removal of Mistry at the Friday board meeting while three, including Nusli Wadia and Subodh Bhargava opposed the move. Tata Steel is the third Tata company to oust Mistry as the chairman. Earlier, TCS and Tata Global Beverages removed him as the Chairman. However, the directors of Tata Chemicals and Indian Hotels supported Mistry.
“In view of the current situation — Special Notice and requisition — received from Tata Sons, the board through circular resolutions dated November 25, passed by majority consent, has decided to replace Cyrus Mistry as the chairman with immediate effect and selected OP Bhatt, an independent director, as the chairman of the board,” the company said.
“The board appointed the independent director (Bhatt) as the chairman keeping in mind principles of good corporate governance and to provide impartial leadership to the Company in its preparation and conduct of the EGM. This decision was taken to also ensure stability to the company and in the larger interest of Tata Steel’s stakeholders including but not limited to employees, trading partners, financial stakeholders and local community around its operations,” a Tata Steel statement to the stock exchanges said.
“O P Bhatt was appointed as an independent director of the company on June 10, 2013. He has served as the chairman of State Bank of India…. He serves as an independent director on several Board’s including Standard Chartered Bank plc, Tata Consultancy Services and Hindustan Unilever,” the statement said. Bhatt is likely to be appointed as full-time chairman by Tata Steel EGM. The Tatas are likely to bring different chairman for various group companies instead of the earlier practice of Tata Sons chairman heading important companies in the group like TCS, Tata Steel and Tata Motors.
The EGM of Tata Steel will consider the removal of Mistry and Nusli Wadia as directors of the company. Wadia had written three letters to the Tata Sons’ board responding to the notice issued to the board of directors of Tata Steel seeking his ouster as an independent director. Wadia has termed the allegations made by the Tata Sons to the board as “false, defamatory and libelous” and has sought the withdrawal of the notice. He has charged the board of Tata Sons of embarking on “personal vendetta” for discharging his duties as an independent director.
Mistry had slammed Ratan Tata for the Corus acquisition. Mistry said, “It is common knowledge that the decision to acquire Corus for over $ 12 billion, when only a year earlier it was available at less than half that price, was based on one man’s ego and against the reservations of some board members and senior executives.” Mistry said the overpayment made it harder to invest in the acquired assets which had been neglected.