Ousted Tata Group chairman Cyrus Mistry on Friday found support from Independent directors of Indian Hotels, a group company. The directors praised steps taken by Mistry in providing strategic direction and leadership to the company. Media reports stated that independent directors found the need to state their views to investors and the public. Independent Directors were confident in Mistry at the helm and the board expressed confidence in him as the Chairman. Removing Mistry as chairman from some of the companies, where Tata Sons is not a majority shareholder, might prove to be hard. Indian Hotels, owner of the Taj chain of hotels, was the first to hold a board meeting after Mistry’s ouster.
Reacting to the development, Anil Singhvi of ICAN Investment said that this is a big wake-up call for all those Tata Sons directors who moved to oust Mistry. Singhvi said, “This is a big corrective move by independent directors of Indian Hotels and eminent persons on Tata Sons board should review their move to oust Mistry.”
Sandeep Parekh of Finesec Law Advisors told ET Now that this step was in the right direction by independent directors of Indian Hotels. “Glad the Indian Hotels board has taken an independent call. Independent directors of India Hotels have acted in the best interest of company. It is time for shareholders of Tata Group companies to act in a decisive and positive manner.”
JN Gupta, former ED of SEBI, speaking to ET Now said that this move by the independent directors of Indian Hotels is unlikely to be an isolated example and may be replicated in other companies too. “Battle will be tough for both Tata and Mistry camps going forward and the stance taken by big financial institutions will be crucial,” he added.
Shailesh Haribhakti, chairman of DH Consultants said that it is a great day for India Inc to celebrate the power of independent directors. “Not at all surprised by Indian Hotels’ directors decision to back Mistry,” he added.
Digging in his heels after being ousted as Chairman of Tata Sons, Mistry plans to continue in his current role at Tata group firms, including Tata Steel, TCS and Tata Motors, where he is Chairman. Sources close to Mistry have said he has no plans to quit as Chairman of these firms. “He will discharge his fiduciary duty as required by law in all his positions in the Tata group,” a source close to Mistry had said. Ratan Tata, patriarch of the Tata group who is temporarily back at the helm as interim chairman, has put together a team of five executives, including two former Mistry advisers, Tata Sons said in a statement.