Cyrus Mistry has denied filing any caveats against Ratan Tata and Dorabji Tata Trust, reports say.
The denial comes after it was reported that Cyrus Mistry had filed four caveats at National Company Law Tribunal against Ratan Tata, Tata Group and Tata Trusts on Tuesday.
It was also reported that the Tatas filed a caveat in the Supreme Court, the Bombay High Court and the National Company Law Tribunal to prevent Cyrus Mistry from getting an ex-parte order against his sacking.
A caveat is a pre-emptive move to avoid getting any court to pass orders without hearing the other side.
In a sudden and surprising development, the Tata Group, led by holding company Tata Sons, had announced in a media statement on Monday that Cyrus Mistry is being replaced as chairman and that former chairman Ratan Tata will take over as interim chairman.
The Tata Sons media statement said:
Tata Sons today announced that its Board has replaced Mr Cyrus P Mistry as Chairman of Tata Sons. The decision was taken at a Board meeting held here today. The Board has named Mr Ratan N Tata as Interim Chairman of Tata Sons.
Tata Sons appointed N Chandrasekaran and Ralf Speth as additional directors on the Tata Sons board on Tuesday.
Chandrasekaran is currently the chief executive officer and managing director of TCS while Ralf Speth is the chief executive officer of Jaguar Land Rover.
Ratan Tata Informs PM Modi
Ratan Tata wrote a letter to Prime Minister Narendra Modi and informed him about the removal of Cyrus Mistry as a chairman of Tata Sons with immediate effect.
"A new management structure is being put in place and a Selection Committee has been constituted to identify the next chairman of Tata Sons," Tata informed PM Modi in the letter.
"The committee has been mandated to complete the process in four months," he added.
Ratan Tata’s Letter to Employees
Assuring the employees that Mistry’s ouster is “in the interest of the stability of and reassurance to the Tata Group,” Ratan Tata wrote a letter to his colleagues on Monday.
No Basis For Media Speculation On Litigation Over Cyrus Mistry’s Exit
According to an earlier report in The Economic Times, Shapoorji and Pallonji Group, the majority shareholder in the Tata Group, had termed Cyrus Mistry's ouster from Tata Sons illegal.
But on Tuesday, Shapoorji Pallonji group’s official spokesperson said that the speculation regarding litigation over Mistry’s ouster is completely baseless at this stage, reported BloombergQuint.
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 the litigation at this stage. As and when a public statement becomes necessary, it would be made.Official Spokesperson, Shapoorji Pallonji Group
Tata Group reportedly also sought legal advice from Senior Advocate Mohan Parasaran, Justice Raveendran and P Chidambaram before ousting Cyrus.
Tata Sons has also announced the members of the Board which will choose a new chairman for the company.
The Board has constituted a selection committee to choose a new chairman. The committee comprises Mr Ratan N Tata, Mr Venu Srinivasan, Mr Amit Chandra, Mr Ronen Sen and Lord Kumar Bhattacharyya, as per the criteria in the Articles of Association of Tata Sons. The committee has been mandated to complete the selection process in four months.
BloombergQuint quoted a spokesperson of the Tata Trust as saying:
The Board in its collective wisdom and on the recommendation of the principal shareholder decided it may be appropriate to consider a change for the long term interest of Tata Sons and Tata Group. The selection committee has been constituted. The committee has been mandated to complete the process in four months. There is no change at the levels of CEOs in the operating companies.
Also Read: From Ratan Tata To Cyrus Mistry And Back
“Tough Love” Costs Mistry His Job?
It could be that Mistry’s “tough love” cost him his post. In June 2016, when Bhaskar Bhatt, director of Titan, a Tata Group company, said the late JRD Tata’s “affectionate love” has been effective in continuing to attract talent towards the company, Cyrus quipped that it was time for some “tough love”.
He reasserted his “tough love” in September 2016, when he emphasised the need to confront the challenges faced by the company, The Economic Times reported.
There are speculations that Tata Sons was unhappy with Mistry's approach of shedding non-profit businesses, including the conglomerate's steel business in Europe, and concentrating only on cash cows. Most of the Tata companies are under-performing.
Tata Steel, once the brightest star in the Tata constellation thanks to the $12.5 billion acquisition of Anglo-Dutch competitor Corus in 2007, bore the brunt of a sharp plunge in prices since 2012 abetted by Chinese glut. The loss-making telecom business has been locked in a bitter and potentially costly battle with erstwhile partner NTT DoCoMo of Japan, which secured a $1.2 billion arbitration award in June 2016. Dozens of consumption-linked businesses such as Titan, Tata Global Beverages, Indian Hotels, Trent, and Rallis India are slightly better off, but their collective operating profit has grown only 4% CAGR in the past five years.The Economic Times
A Brief History of Mistry
Mistry was appointed as the chairman of the Tata Sons board in December 2012 to become the sixth Group Chairman of the company.
He was also the chairman of leading companies under the Tata Sons like Tata Steel, Tata Motors, Jaguar Land Rover Automotive, Tata Consultancy Services, Tata Power Company, The Indian Hotels Company, Tata Global Beverages, Tata Chemicals, Tata Industries and Tata Teleservices.
Cyrus Mistry graduated from Imperial College with a civil engineering degree from London in UK in 1990 and then he postgraduated with a MSc in management from the London Business School.
The big question it seems is whether the Tata-Pallonji family will find a new chairman within the family or whether it would need to look outside. And whether Mistry was removed or whether he himself stepped down is yet to be known. According to reports, Mistry was appointed the chairman of Tata Group after a global search.
Experts React to Mistry’s Exit
TV Mohandas Pai, a former member of the board of directors of Infosys, told ET Now that the move to bring back Ratan Tata shows there is something wrong with the Tata Group.
Trying to change the culture in a group like the Tata is a challenge. Mistry had been brought in to hold the group together and lead a turnaround, but we did not see much of anything and he seemed to have kept doing much of the same.
Author Gurucharan Das said that shareholders get nervous when they get surprises like this.
It is not good to have surprises for such a large group. Shareholders get nervous. But I think there should be some clarification over the move.
AK Prabhakar, who heads IDBI Capital said, “Cyrus had a different approach to handling things. He was consolidating the Tata businesses by selling non-crore businesses and was concentrating on the high-margin businesses. Tatas are good as humans, but in business cycle, they are bit lavish.”
(With inputs from The Economic Times and BloombergQuint)
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