Tata group should be more forthcoming as the abruptness of developments there has left stakeholders bewildered, proxy advisory firm IiAS said against the backdrop of Cyrus Mistry's removal as the conglomerate's Chairman.
Tata group should be more forthcoming as the abruptness of developments there has left stakeholders bewildered, proxy advisory firm IiAS said today against the backdrop of Cyrus Mistry’s removal as the conglomerate’s Chairman.
After his unceremonious ouster as Chairman of the over $100 billion conglomerate, Mistry made a scathing attack on the group and Ratan Tata in a letter written to the board of Tata Sons, which has hit back and refuted the allegations.
Noting that unlisted Tata Sons sits at the apex of the largest business group in India, IiAS said absence of clear communication has prompted excessive speculation.
“The abruptness of developments at the Tata group has left stakeholders bewildered,” IiAS said in its report titled ‘Turbulence at Tata Sons: What stakeholders are asking’.
According to the report, the discussion and scrutiny is happening along three arcs — the legality of the process, the the decision itself, and what happens now that Mistry has been ousted.
Tata Sons is the main holding company of the group.
The proxy advisory firm emphasised that even though Tata Sons is an unlisted entity and therefore accountable to a limited set of stakeholders, its actions affect the entire Tata group of companies as well as in a “sense the whole of corporate India”.
The report said Tata group must recognise its engagement rules have now changed in making an almost cursory statement that the Chairperson of Tata Sons has been ‘replaced’ and a generic response to Mistry’s email leak, the group is taking an extremely narrow and legal view of Tata Sons.
“But, developments including the leaked Cyrus Mistry letter, may have put events beyond their control. How the group flies through this turbulence, will determine the way the group is perceived and its terms of engagement with its stakeholders,” IiAS said.
Further, the proxy advisory firm said that in the absence of hard facts to substantiate their action, “the group risks losing public trust”.
“The Tata group, given its stature and its century-old presence, is responsible and accountable to a much wider set of stakeholders. It is time that the Tata group takes cognisance of this and begins to proactively communicate,” it added.
IiAS has made a disclosure that Tata group through Tata Investment Corporation Ltd holds equity in the proxy advisory firm while noting that the report is based entirely on publicly available information.