{"id":66619,"date":"2017-02-07T15:45:05","date_gmt":"2017-02-07T10:15:05","guid":{"rendered":"http:\/\/www.mapsofindia.com\/my-india\/?p=66619"},"modified":"2017-03-20T17:38:09","modified_gmt":"2017-03-20T12:08:09","slug":"this-is-why-cyrus-mistry-was-removed-as-director-of-tata-sons","status":"publish","type":"post","link":"https:\/\/www.mapsofindia.com\/my-india\/business\/this-is-why-cyrus-mistry-was-removed-as-director-of-tata-sons","title":{"rendered":"This is why Cyrus Mistry was removed as Director of Tata Sons"},"content":{"rendered":"

\"Tata-Sons-Removes-Cyrus-Mistry-as-Director\"<\/a><\/p>\n

In the extraordinary general meeting (EGM) held on February 6, 2017 at Bombay House in Mumbai, the 11-member board of Tata Sons Limited passed with requisite majority the resolution to oust Cyrus P. Mistry<\/a> as Director in Tata Sons. This was the final separation of any official connection between Cyrus Mistry and Tata Group companies.<\/p>\n

He now remains a mere shareholder in Tata Sons, where his family owns 18.4% share. Tata Trusts hold around 66% stake, while Tata Group companies hold 13%. Ratan Tata holds 0.83%, Noel Tata 0.51%, Jimmy Tata 0.81% and Simone Tata 0.50%.<\/p>\n

But the battle is still not over.<\/p>\n

Cyrus Mistry had earlier approached National Company Law Tribunal (NCLT) seeking a stay on Tata Sons\u2019 call for an EGM to remove him as Director. On January 31, NCLT refused to stay the EGM.<\/p>\n

Cyrus Mistry\u2019s two investment companies then approached National Company Law Appellate Tribunal (NCLAT), which too refused to stay the EGM. NCLT will now hear the petition on February 13-14. The earlier petition was to stay the EGM but since the EGM has already taken place and he has been removed, the petition will now be revised to challenge his removal on grounds of mismanagement and suppression of shareholder\u2019s right.<\/p>\n

In case Cyrus Mistry fails to successfully argue his case challenging his ouster, the case will be dismissed. It will mean curtains for Mistry as far as any official involvement in Tata Sons Limited is concerned and will finally bring to close the unsavoury public spat between him and Ratan Tata, that has dented the overall image of the Tata Group.<\/p>\n

The EGM was closely followed by all stakeholders, media and the public. The spotlight was also on Noel Tata, Ratan Tata\u2019s step-brother. In the ongoing spat between Ratan and Cyrus Mistry, Noel Tata has had to walk a tightrope and has, therefore, not taken any public position on this.<\/p>\n

Noel is married to Cyrus Mistry\u2019s sister and this had put him in an awkward position whether to vote in favour or against Mistry. Many felt that Noel may abstain from voting as his vote would have no consequence on the overall outcome, since Tata Trusts along with other Tata Group companies control over 80% shares in Tata Sons Limited.<\/p>\n

Noel and his mother Simone, Ratan Tata\u2019s step mother and ex-wife of Naval Tata, both abstained from attending the meeting but voted through their proxies. With Ratan Tata likely to step down on February 20 from the board, it is likely that Noel Tata may be inducted as Director in his place.<\/p>\n

Noel Tata runs Tata Trent and Tata International and has cordial relations with both Ratan Tata and Cyrus Mistry.<\/p>\n

Why was Cyrus Mistry abruptly removed as Chairman of Tata Sons?<\/strong><\/h2>\n

In the last week of October 2016, the board of Tata Sons Limited announced that Cyrus Mistry had been removed as Chairman and that Ratan Tata had been appointed as the interim Chairman until a suitable replacement was found.<\/p>\n

The move stunned the corporate world that has always looked upon the Tata Group as a business house that was ethical, stable and professionally run. The abruptness of such a significant move came as a surprise, with many questioning the reasons behind the Mistry\u2019s ouster.<\/p>\n

The announcement may have shocked the industry but Cyrus Mistry was fully aware that the board of Tata Sons was unhappy with him and was pushing him to step down.<\/p>\n

Board members of Tata Sons, Lord Bhattacharya and Ronen Sen had been informally discussing with Cyrus to step down but he had refused to do so. This further exacerbated tension and distrust between the board and Cyrus, with Ratan Tata taking a strong position against him.<\/p>\n

Other fallout from the Tata-Mistry dispute<\/strong><\/h2>\n

Had Cyrus stepped down gracefully once he lost the board\u2019s confidence, it would have been without too much attention or controversy. One major fallout has been the breakdown of mutual trust and confidence between the Tata and Shapoorji Pallonji groups. Both have had deep and long-standing association that transcended business. The relationship now stands broken, perhaps forever.<\/p>\n

The other fallout has been the breakdown of friendship between Ratan Tata and Nusli Wadia. The latter has been an old associate and trusted friend of Ratan Tata and has been on board of several Tata group companies.<\/p>\n

His taking sides with Cyrus in this dispute has led to him being removed as Director from all Tata group companies, besides spoiling his long, personal relationship with Ratan Tata.<\/p>\n

Reasons for Mistry ouster<\/strong><\/h2>\n

Style of functioning<\/strong><\/h3>\n

Cyrus Mistry was selected to replace Ratan Tata as Chairman of Tata Sons in 2012 and was expected to provide strong and stable leadership to the group well into the 21st<\/sup> century.<\/p>\n

However, the Tata Sons board had been unhappy with Mistry\u2019s style of functioning, as he had taken several major decisions concerning various Tata group companies without keeping the board fully informed.<\/p>\n

No clear roadmap for next 5 years<\/strong><\/h3>\n

The board had been requesting Mistry to present them with a clear five-year plan for the group. Mistry on his part, never submitted a clear and well defined roadmap. This caused a lot of concern and dissatisfaction within the board.<\/p>\n

Decision to sell Tata Steel, Europe<\/strong><\/h3>\n

His decision to sell off Tata Steel, Europe did not go down well with Ratan Tata, who had worked hard to take over Corus and establish Tata Group strongly within the British industry.<\/p>\n

Decision to acquire Welspun Renewables Energy<\/strong><\/h3>\n

The board was unhappy with Mistry\u2019s decision to allow Tata Power Limited to acquire Welspun group\u2019s renewable power business without seeking board approval. Tata Power has been a capital intensive \u2013 low profit generating company for the group and therefore, the prudence of making the acquisition was being questioned.<\/p>\n

Legal wrangle with NTT DoCoMo<\/strong><\/h3>\n

The legal battle between Tata Teleservices and Japanese telecom giant NTT DoCoMo, took a bad turn with the dispute being referred to the London Court of International Arbitration. Tata lost the appeal and was directed to pay NTT compensation in excess of $1.2 billion.<\/p>\n

Ratan Tata had been very unhappy with how Cyrus dealt with the matter, as he was in favour of fulfilling the terms of agreement that required Tata to pay compensation to NTT.<\/p>\n

Controversial Appointments<\/strong><\/h3>\n

After taking over as Chairman, Cyrus established a Group Executive Council (GEC) to help him steer strategy and policy for the group. The Tata Sons board was clearly unhappy with the executives Mistry selected. Furthermore, the fact that Mistry had made no move to appoint a Group CFO for three years, irked the board.<\/p>\n

The future hereon<\/strong><\/h2>\n

The Tata group has been a flag bearer for the Indian corporate industry, setting high business and ethical standards. This image has taken a beating and so, the next Chairman, N Chandrasekharan, will have restoration of public faith in the Tata Group as his first priority.<\/p>\n

Ratan Tata led the group from a $6 billion to a $ 100 billion-plus conglomerate and N Chandrasekharan will now have to steer the group to make the next big leap.<\/p>\n

Cyrus Mistry remains one of Indian Inc.\u2019s brighter talents and he will do well to immerse himself deeper with his family-run Shapoorji Pallonji group of companies, and steer the group forward with emerging opportunities in India and overseas.<\/p>\n

It\u2019s time to put this ugly saga behind.<\/p>\n

Read More…<\/strong><\/p>\n

Cyrus Pallonji Mistry Biography<\/a><\/p>\n

Indian businesspersons in a nutshell \u2013 Ratan Tata<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In the extraordinary general meeting (EGM) held on February 6, 2017 at Bombay House in Mumbai, the 11-member board of Tata Sons Limited passed with requisite majority the resolution to oust Cyrus P. Mistry as Director in Tata Sons. This was the final separation of any official connection between Cyrus Mistry and Tata Group companies. […]<\/p>\n","protected":false},"author":1316,"featured_media":66649,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39,11315],"tags":[7398,7399],"class_list":{"0":"post-66619","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"category-india","9":"tag-cyrus-mistry","10":"tag-director-of-tata-sons"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/posts\/66619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/users\/1316"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/comments?post=66619"}],"version-history":[{"count":4,"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/posts\/66619\/revisions"}],"predecessor-version":[{"id":68362,"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/posts\/66619\/revisions\/68362"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/media\/66649"}],"wp:attachment":[{"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/media?parent=66619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/categories?post=66619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mapsofindia.com\/my-india\/wp-json\/wp\/v2\/tags?post=66619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}