Tata Consultancy Services (TCS), on Monday said that its former Chairman Cyrus Mistry’s conduct has caused enormous harm to the company, the Tata group and other stakeholders, including employees.
In a stock exchange filing, the infotech services major asked its shareholders to oust Mistry from the board of directors. TCS has called for an Extraordinary General Meeting (EGM) on December 13 in Mumbai to pass a resolution to this effect.
“Subsequent to his replacement as Executive Chairman of Tata Sons Ltd, Mistry has made certain unsubstantiated allegations, which cast aspersions not only on Tata Sons and its board of directors, but also on the Tata group as a whole, of which TCS is an integral part. “The communication, which was marked as ‘confidential’, was made public. Mistry’s conduct has caused enormous harm to the Tata group, TCS and its stakeholders, including employees and shareholders,” TCS said in the stock exchange filing.
The communication being referred to is the note written by Mistry to the board of Tata Sons after his ouster. In that letter, Mistry had blamed Ratan Tata for interfering and for taking flawed decisions in the past.
While Tata Sons has already removed Mistry as the Chairman of TCS and replaced him with Ishaat Hussain, it now wants to remove him from the Director’s position as well. TCS said that its board was in agreement as “the same would be in the best interests of the company.”
The Tata group has initiated a similar move in other companies, including Tata Motors and Tata Steel. Tata Sons has already asked these companies to call for an EGM to seek shareholder approval to force Mistry out of the boardroom.
According to analysts, the Tatas will find it easier to get what they want in TCS since they hold a 73 per cent stake. In other group companies, however, the outcome will depend on how financial institutions vote as Tata Sons holds only a 30-40 per cent stake in them.
Mistry is a Director in seven listed companies of the Tata Group. Tata Sons’ shareholding is lowest in Tata Chemicals and highest in TCS. All the companies have a fairly large shareholding of retail investors, between 20 and 30 per cent, with the exception of TCS, where the promoters own 73 per cent and Tata Power, where retail investors hold 16.40 per cent.
“The fact that TCS was the first to announce the date for the EGM shows that the Tatas don’t want to take any chances. They are going with the safest bet first and hoping that it will rub off on the shareholders of the other group entities,” said an industry source aligned with the Mistry camp.