A day after the Tata group asked its chairman Cyrus Mistry to go, Interim Chairman Ratan Tata walked back to the corner office on the chairman’s floor at Bombay House, headquarters of the group, to address the group’s top chief executive officers (CEOs).
Tata’s message was simple: “It’s business as usual and it’s time to build the group together.”
While Tata was addressing the CEOs, the group’s legal team was busy filing caveats in various courts, including in the Supreme Court, National Company Law Tribunals, and in the Bombay High Court, anticipating legal action by Mistry against his ouster, though the latter ruled out any legal action as yet on Tuesday.
In a late development on Tuesday, Tata Sons appointed Tata Consultancy Services CEO N Chandrasekaran and Jaguar Land Rover CEO Ralf Speth as additional directors on its board. Tata said, “This is in recognition of their exemplary leadership in their companies.”
Insiders said in a short, crisp and to-the-point interaction with the CEOs, Tata said the companies must focus on their market position vis-à-vis competition, and not compare themselves with their own past. “The drive must be on leadership rather than to follow,” said Tata. Most of the CEOs heard of Mistry’s ouster from the media, though the boards of Tata Power and Tata Motors had met on Monday to remove Mistry. The rest of the Tata group companies are expected to remove him from their boards in the coming days.
Tata, wearing a light blue shirt and grey trousers, did not take questions from the waiting media that had gathered outside Bombay House.
Around 25 managing directors and senior leaders of Tata companies including Tata Steel CEO T V Narendran; Indian Hotels CEO Rakesh Sarna; and Tata Motors MD Guenter Butschek attended the meeting. Some CEOs such as Tata Consultancy Services CEO N Chandrasekaran, who were travelling abroad, joined the meeting via video conferencing.
Sources privy to the meeting said Tata did not speak about the sudden expulsion of Mistry. "I look forward to working with you as we have worked together in the past. An institution must exceed the people who lead it. I am proud of all of you, and let us continue to build the group together," said Tata.
Tata also reiterated to the CEOs that he had assumed the role of interim chairman for stability and continuity so that there was no vacuum. "This will be for a short time. A new permanent leadership will be in place," he promised. On Monday, Tata Sons had announced that a new search committee would find a chairman in four months.
Tata asked the leadership of the companies to focus on their businesses, without being concerned about the change in leadership. Referring to ongoing initiatives in the companies, he said, "We will evaluate and continue to undertake those that are required. If there is any change, they will be discussed with you."
Action, meanwhile, is expected to shift to the courts. Senior corporate lawyer, Abhishek Manu Singhvi said he has been retained by the Tatas. "I am not going to speak on the merits of the case. But let me make it clear that this is a sad moment for everyone. They are all senior persons with great respect in the industry, but sometimes such actions become inevitable when the entire board loses confidence in its chairman," said he.
"That does not mean that people are scoring debating points or saying I told you so or making triumphant snide remarks. I am sure statesmanship can still win the day but courts are always available as the last resort," he said.
A top corporate lawyer said Mistry did not have a case against the Tatas for his removal, as the board had the powers under its Articles of Association to remove the chairman.
Mistry, however, received support from Adi Godrej, a family friend and chairman of Godrej group. "I have known Cyrus most of his life and I have found him a person of integrity and character. I was saddened to see something like this happen in India's most renowned group. This is not good for Indian business. There are much better ways of sorting out differences," he said.
The change of leadership made Tata group shareholders nervous as they sold shares on Tuesday. TCS stock was down 1.2 per cent, Tata Steel 2.5 per cent, Tata Motors 1.07, Tata Communications 2.26 per cent, and Tata Power 1.5 per cent at the close of trading hours. The only exception was Tata Teleservices Maharashtra which was up 2.8 per cent.