Tata Sons Dismiss Mistry’s Letter, Blame Him for ‘Enormous Damage’

The company termed Mistry’s letter a “smokescreen of baseless allegations passed off as an appeal”.

Former Tata Sons Chairman Cyrus Mistry shared his side of the story in a 15-page representation to shareholders on Monday, saying the group was nobody’s personal fiefdom. This representation is the basis on which Mistry will defend himself in the extraordinary general meetings (EGMs) of shareholders of six Tata group companies, starting 13 to 26 December, which have been convened to remove him as director.

The Tata Group is no one’s personal fiefdom: it does not belong to any individual, not to the trustees of Tata Trusts, not to the Tata Sons directors, and not to the directors of the operating companies.

Cyrus Mistry, Former Chairman, Tata Sons

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Overstepping Governance Structure

Tata Trusts are public charitable trusts and the future of the group lies in how the trustees govern it, Mistry stated.

If trustees start managing the business, overstepping the entire governance structure in Tata Sons, they will jeopardise the legal status of the trusts, thereby risking the future of the Tata group, he argued.

Also Read: This is Why Ratan Had to Say Tata to Cyrus Mistry

The conferment of all decision-making power in one man or a “high command” among them is unethical, improper, and a breach of trust. It is critical that serious decisions of severe magnitude and consequence are not taken whimsically, without much thought, or for unstated collateral objectives.

Cyrus Mistry, Former Chairman, Tata Sons

The Outsider

In his letter, Mistry said that as a director of Tata Sons he was aware of the business challenges and opportunities created by the acquisition spree, but was unaware of the magnitude of these challenges.

When I took over, due to a variety of factors, ranging from the retirement of individuals, strategic induction of fresh minds, and new company law requirements, there was a marked shift in the composition of the Tata Sons Board. Therefore, most of the directors of Tata Sons too were “outsiders”.

Cyrus Mistry, Former Chairman, Tata Sons

The Five Hotspots

It soon became evident that some of the companies were dragging the group down, Mistry said in his representation.

It soon became apparent that much of the Tata Group’s capital was locked down in five “hot spots” which were dragging down performance. These put the entire Tata Group to risk and needed tackling on a war footing.

Cyrus Mistry, Former Chairman, Tata Sons

Also Read: Tata-Mistry Row: What Transitions Will the Tata Empire Undergo?

Reason For Dismissal

Mistry said Tata Sons did not offer an appropriate reason for his dismissal.

I am told that at a meeting of CEOs of Tata Group companies Mr Ratan Tata was asked by a CEO why I was removed as Executive Chairman. Mr Ratan Tata is reported to have replied that ‘the answer will probably go with me to my grave’. Therefore, the impression sought to be created was that there was something unspeakable underlying his inexplicable and unreasonable conduct.

Cyrus Mistry

Tata Sons’ Counter Allegation

Tata Sons hit back at the ousted chairman’s claims and said that it was in fact Mistry who had converted the group into his own “personal fiefdom”, and through his unilateral actions destroyed the “precious institutional memory of the House of Tata”.

Sixty-six percent of the holding company is owned by charitable trusts, and there is no prejudice for any individual or a family, Tata Sons said in a statement in response to Mistry’s 15-page representation.

Finally – and most importantly – it must be recalled that the operating Tata companies and Tata Sons have, for many decades, worked cohesively and seamlessly for the benefit of all stakeholders namely the companies, their shareholders and employees and for society at large. There was no other agenda or personal interest as ultimately even the dividends paid to Tata Sons and subsequently to its own shareholders went largely back to philanthropy except for those paid to the minority shareholders.

Tata Sons Statement

The holding company affirmed that shareholders are qualified enough to see through the “smokescreen of baseless allegations passed off as an appeal” by Mistry. They added that Mistry's actions since his ouster on October 24 have led to financial losses at the group companies.

His statements have caused the group (including the companies where he continues to be the chairman) enormous damage and caused considerable financial loss to all shareholders, running into tens of thousands of crores.

Tata Sons letter

Read the full story on Bloomberg Quint.