In an unprecedented move, Tata Sons interim chairman Ratan N Tata has made an appeal to shareholders seeking their support for the removal of chairman Cyrus Mistry.
This would be the first time Ratan Tata has decided to seek shareholders’ support in Extraordinary General Meetings (EGM) during the 21 years he led the Tata group.
Mistry was ousted as the chairman of Tata Sons, the holding company of Tata group of companies, on October 24 after four years in the role. Tata, chairman emeritus of the group, had taken over the reins as interim chairman.
“We now seek your support of the resolution that Tata Sons has moved in the forthcoming EGMs of our companies, for the removal of Cyrus Mistry as director,” Tata’s letter, dated December 7, said.
Mistry was replaced as the board had “lost confidence” in him and in his ability to lead the Tata group in the future,” it said, adding the board had taken this step after the relationship with Mistry steadily deteriorated and several attempts to remediate went unheeded.
An opportunity to given to Mistry to voluntarily step down was rejected, and his continued presence as a director is a “serious disruptive influence” on the board of these companies, it said.
Tata, in the letter which also sought to dispel shareholders’ doubts, went to assure that some of the group’s investments were “hugely successful”, while others have taken time to be profitable. He cited examples of Tata Consultancy Services and Jaguar Land Rover as examples of success, and that of Tata Steel as taking time to be profitable.
Stating Tata Sons constantly evaluates new business opportunities and invests in creating new enterprises, Tata said the group’s approach is to “support and fund these businesses during their development and growth phases”.
“In every situation, our capital allocation decisions are always based on maximising long-term shareholder returns such as return on capital employed, return on equity and free cash flows,” the letter added.
The letter also said that Tata group companies were respected for promoting and practising best corporate governance standards, while Tata Sons support the companies by way of investments, strategic advice and leadership talent development.