A file photo of ousted Chairman of Tata Sons Cyrus Mistry leaving from Bombay House in Mumbai.
Even as the board of Tata Sons meets on Thursday at Bombay House, the iconic headquarters of the Tata group in Mumbai, the Mistry camp has sent a legal notice to Tata Global Beverages on his “illegal” removal as Chairman in Tuesday.
Sources close to the development said the removal of Mistry as a director is not scheduled on the agenda of Tata Sons. Mistry, however, is expected to make a presentation to directors on the initiatives taken by him though he may face a hostile board.
Tata Trusts along with other Tata group companies own 81.5% stake in the holding company. Mistry’s term as a director will come to an end in March 2017. The Mistry family owns 18.5% stake in Tata Sons, the unlisted holding company of the Tata group.
This will be for the first time that Tata Sons would be meeting after it ousted Mistry as its chairman on October 24 without citing any official reason. Mistry is planning to legally challenge his ouster as Tata Sons chairman as, according to the Mistry camp, no notice was issued to the directors before his removal and the appointment of Ratan Tata as Interim Chairman.
On Tuesday, the board of Tata Global Beverages removed Mistry as chairman with seven of the 10 directors present voting in favour of removing him. Mistry has called his ouster an “illegal act”.
Tata Sons has also sent a letter to Tata Motors, Tata Steel, Tata Consultancy Services, Tata Chemicals and Indian Hotels, to convene an extraordinary general meeting of shareholders to remove Mistry. In Tata Motors, Tata Steel and Tata Chemicals, Tata Sons has included the removal of senior independent director Nusli Wadia too from the board as directors. Tata Sons has accused Wadia of galvanising other independent directors against Tata, say sources.
The board meeting on Thursday will be attended for the first time by TCS CEO and MD N Chandrasekaran and Jaguar Land Rover CEO Ralf Speth who were inducted soon after Mistry was ousted on October 24. The board is also likely to discuss the progress made by the selection panel on finding a new Chairman of the group with Chandrasekaran leading the race, said an insider.
The Tata Sons board has undergone major changes since August this year when three new directors, Ajay Piramal, Amit Chandra, and Venu Srinivasan were inducted on the board as independent directors. Venu Srinivasan was also inducted as a trustee on Sir Dorabji Tata Trust, which holds 28% in Tata Sons. Venu’s wife Mallika Srinivasan serves on the board Tata Steel and Tata Global Beverages as an independent director.
The worrying news for the board is coming from the stock markets where the group companies' shares have lost Rs 1,26,000 crore, or 15% of market capitalisation since Mistry was removed. Tata Sons, as a shareholder, has lost Rs 53,273 crore worth of wealth in its stake from the Tata group’s listed companies. In the same period, the BSE Sensex has lost 8.5%.
The destruction in the market value of the Tata group companies was mainly due to Mistry’s warning after his ouster that the group companies are facing $18-billion of potential write-downs due to bad acquisitions made by Ratan Tata during his tenure.