Mistry stays on at Tata Motors

The slugfest between Cyrus Mistry and Tata Sons played out at Tata Motors on Monday with the company’s board meeting witnessing a heated debate between the directors.

At the end of it, the company issued a statement that appeared like an attempt to portray a compromise between the two factions but in reality gave a peek into the deep rift.

While the statements issued by Tata Chemicals and Indian Hotels had unequivocally backed Mistry, the statement issued by Tata Motors mentioned both Mistry and the management.

“The independent directors have confirmed that all decisions taken by the Board with regard to the strategy, operations and business of the company have been unanimous and executed by the Chairman and the management accordingly,” the statement said.

“The independent directors have further affirmed that the company continues to be governed supervised and managed under the guidance and direction of the Board. The management of the company and its subsidiaries have the full confidence and support of the independent directors,” it added.

Unofficially both sides claimed victory.

According to sources, at least two independent directors opposed a move by Nusli Wadia to pass a resolution similar to the one passed by the board of Indian Hotels. “Wadia had come with a prepared note backing Mistry, but there was opposition. Therefore, if you look at the statement there is a clear change in the tone and language,” said a source close to the Tata camp.

Sources close to the Mistry camp, however, said the statement clearly indicates that the directors support him.

Though Mistry retained his position as Chairman of Tata Motors despite a lack of unanimity among the members on the issue of backing him, Tata Sons has already moved to oust him through an EGM. The ball is now in the court of shareholders.

Tata Sons, in a statement last week, blamed Mistry for the company’s depleting market share. “There has been a perilous drop in market share in both passenger cars and commercial vehicle areas over the past three years. In passenger cars, in the year ended March 2013, the market share was 13%, which now stands at 5%! It will be difficult if not impossible to retrieve the market share losses,” Tata Sons had said in its statement.

Mistry claims that lax risk assessment and an obsession with the Nano led to NPAs mounting in excess of ₹4,000 crore at Tata Motors. “As there is no line of sight to profitability for the Nano, any turnaround strategy for the company requires to shut it down. Emotional reasons alone have kept us away from this crucial decision,” Mistry had written in a letter to Tata Sons directors. With most of the resources going into the Nano, Tata Motors kept falling behind its rivals.

In its quarterly earnings announced on Monday, consolidated profit after tax for the July-September quarter was ₹848 crore, against the consolidated loss after tax of ₹1,740 crore for the corresponding quarter last year.

Consolidated revenues also rose about 7 per cent to ₹67,000 croreagainst ₹62,647 crore in the year-ago period.