Tata Sons has decisively won a critical round in its tussle with Cyrus Mistry, with the shareholders of Tata Industries voting on Monday in favour of a resolution to oust him as director on the company’s board.
This comes a day ahead of the crucial Extraordinary General Meeting of Tata Consultancy Services (TCS), which is also considering a proposal to remove Mistry.
The move to oust Mistry is significant as several Tata group companies such as Tata Motors, Tata Power and Tata Steel hold stakes in Tata Industries.
Mistry was ousted as Tata Sons’ Chairman on October 24 following a boardroom battle, with Ratan Tata taking over as the interim chairman. He, however, continues to be director of many Tata group compaines, and has refused to step down from the boards of Tata companies.
This prompted Tata Sons, the holding company of all Tata firms, to convene EGMs seeking his ouster.
The EGMs of other Tata group companies will begin from Tuesday, starting with the flagship TCS.
According to industry experts, TCS shareholders will likely vote against Mistry as Tata Sons holds nearly 73 per cent in the IT behemoth, the group’s crown jewel. Mistry is expected to make a statement at the EGM explaining his position.
Proxy advisory firms SES and IiAS have asked public shareholders to vote in favour of Mistry’s removal. “While Tata Sons (TSL) was legally right in removing Mistry, optically the decision did not appear to be justified. (But) the board of a company (that is, TCS) cannot sit and adjudicate on a matter that is extraneous to the company. A divided board is dangerous and will erode shareholder value,” SES said.
After TCS, the EGM of unlisted Tata Teleservices will happen on Wednesday. EGMs of other listed Tata entities will be held next week. Tata Sons’ does not hold majority stake in most of the other firms. The outcome would therefore be largely depend on how the institutional investors, especially LIC, vote.
Both sides have been vigorously campaigning to seek shareholders backing.
Wadia’s letter On Monday, Nusli Wadia made a fresh attempt to garner support for himself and Mistry. Tata Sons is also seeking to oust Wadia out of various group firms for siding with Mistry. In a note to shareholders, Wadia said the allegations against him were baseless as his actions were “independent and not linked to any individual”