In yet another assault on Cyrus Mistry, who was unceremoniously removed as Tata Sons chairman on October 24, the board of directors of Tata Steel on Friday replaced him as its chairman and appointed former State Bank of India chairman OP Bhatt, who is an independent director on the company’s board, as its interim chairman.
The company also said it has convened an extraordinary general meeting (EGM) on December 21 to remove Mistry and Nusli Wadia, who is an independent director, from the company’s board.
While Tata Steel termed Mistry’s removal as chairman and Bhatt replacing him “keeping in mind principles of good corporate governance and to provide impartial leadership to the company in its preparation and conduct of the EGM”, sources close to Mistry termed the move as yet another instance of “unprecedented erosion of core Tata values”.
“We believe that this unprecedented erosion of core Tata values, is seriously damaging Brand Tata. Each time one thinks the current standard of corporate governance in Tata Group listed companies under the leadership of the interim chairman cannot hit a newer low, one has been belied. Just minutes before a convened and pre-scheduled board meeting, a circular resolution replacing the chairman for the meeting is said to have been initiated. Those involved are representatives of Tata Sons, those drawing large remuneration from other Tata Trustee-controlled companies, and an ‘independent’ director, who is the wife of a newly-inducted Tata trustee, who is also recently nominated director of Tata Sons,” sources close to Mistry said.
A Tata Steel statement said Bhatt will serve as chairman till the outcome of the EGM.
Earlier, on November 11, Tata Steel said its board took note of the leadership changes at Tata Sons and had received a special notice from the promoter and principal shareholder to convene an EGM for removal of Mistry and Wadia as its directors.
“The board of directors through circular resolutions dated November 25, 2016, passed by majority consent, has decided to replace Cyrus P Mistry as chairman of the board with immediate effect and elected OP Bhatt, an independent director as the chairman of the board,” it said. “This decision was taken to also ensure stability to the company and in the larger interest of Tata Steel’s stakeholders, including but not limited to employees, trading partners, financial stakeholders and local community around its operations,” it added.
Tata Sons holds 29.75% stake in Tata Steel.
With the current development, six Tata Group companies — Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals and Indian Hotels Company (IHCL) — have now convened EGMs to remove Mistry as director from their respective boards. Three of the boards, those of TCS, Tata Global Beverages and now Tata Steel, have already replaced him as chairman.
Apart from Mistry, Tata Sons is also gunning for Wadia as he as an independent director in some companies has been supporting Mistry. Wadia has already sent a defamation notice to Tata Sons saying the special notice to remove him from the board of the companies had lowered his image.