Cyrus Mistry was offered opportunity to step down voluntarily, says Ratan Tata; ‘not true,' claims ousted chairman

Accusing Ratan Tata of lying, ousted Tata Sons Chairman Cyrus Mistry today said the letter by veteran industrialist to shareholders of Tata companies is a combination misrepresentation and convenient mischaracterisation.
Cyrus Mistry, Ratan Tata, Tata chairman,Tata Group Source: PTI
India TV Business Desk Mumbai December 07, 2016 23:49 IST

Accusing Ratan Tata of lying, ousted Tata Sons Chairman Cyrus Mistry today said the letter by veteran industrialist to shareholders of Tata companies is a combination "misrepresentation and convenient mischaracterisation."

In a statement, Mistry's office also denied that his sacking was preceded by various attempts to discuss with him. 

Ahead of EGMs of six Tata group firms called to remove Cyrus Mistry as director, Ratan Tata today told shareholders that the continued presence of the ousted executive in respective boards is a serious "disruptive influence" and can make the companies "dysfunctional". 

In his letter, Tata said the "deliberated action" to remove Mistry by the Tata Sons board was taken after relationship with him steadily deteriorated and "several attempts to remediate went unheeded". 

Refuting Tata's claims Mistry's office said in a statement: "Neither was there any deliberation nor was there any prior attempt at remediation as Mr. Ratan Tata now seeks to make out." 

"Mr Ratan Tata does not speak the truth. His claim that Mr Mistry's treatment at Tata Sons Board on that day was well-deliberated and was preceded by various attempts to discuss with Mr. Mistry is a lie," the statement said. 

Tata's "false statements" are borne out by the fact that just weeks before this event, the Board had accepted the Nomination and Remuneration Committee's endorsement of superlative performance by Mistry and his team, the statement said. "It is evident that Mr. Mistry's professional conduct in the Chairman's Office did not suit the requirements of Mr. Ratan Tata," it said. 

The statement claimed that Tata has "completely failed to offer a single reason for his inexplicable actions" of removing Mistry as Chairman of Tata Sons.

It claimed that "five minutes before the Board Meeting scheduled on October 24, 2016, Mr. Nitin Nohria and Mr. Tata came to Mr. Mistry's room and told him that on that very morning, the trustees had taken a decision to replace Mr. Mistry ostensibly because Mr. Tata could not get along with him." 

It further said "the fait accompli presented to Mr. Mistry was that he could leave or face a sacking at the Board Meeting scheduled in the next five minutes." 

At the meeting, every legal procedure was "thrown to the wind and the blemish-less history of Tata Sons' was destroyed", it added. 

Earlier, Tata said Mistry was appointed as a director of various Tata group companies only as a corollary to his being the Chairman of Tata Sons. 

"The right step would have been for him to resign as director. Unfortunately, he has not yet done so and his continued presence as a director is a serious disruptive influence on these company boards, which can make the company dysfunctional, particularly given his open hostility towards the primary promoter, Tata Sons," Tata wrote. 

He further said Mistry was offered an opportunity to step down voluntarily from the Chairman position, which he rejected. 

Justifying the move to sack Mistry, Tata said: "...the Board of Tata Sons lost confidence in him and in his ability to lead the Tata group in the future." 

This deliberated action by the Tata Sons board was taken after several attempts to remediate went unheeded. 

"As a final step he was offered an opportunity to step down voluntarily from the Chairman position, which he rejected and said that it should be taken up at the Board," Tata said, adding this was done and Mistry was replaced. 

Following special resolution moved by Tata Sons to remove Mistry as director, TCS has called an EGM on December 13, Indian Hotels Co Ltd on December 20, Tata Steel on December 21, Tata Motors on December 22, Tata Chemicals on December 23 and Tata Power on December 26. 

There were no immediate comments from the Mistry camp. 

Seeking support from the shareholders, Tata said as a promoter Tata Sons constantly evaluates new business opportunities and invests in creating new enterprises. 

"Some of these investments have been hugely successful -- TCS, Jaguar Land Rover while some others like Tata Steel Europe have taken time to be profitable. Our approach has been to support and fund these businesses during their development and growth phases," Tata said. 

Taking a dig at Mistry's steps to sell assets of Tata Steel UK, Tata said the group exits the business only when it believes "it is unviable", he added. 

"In every situation our capital allocation, decisions are always based on maximising long term shareholder returns viz return on capital employed, return on equity and free cash flows. So there has always been and will continue to be a strong alignment of interests between us and the minority shareholders," Tata wrote. 

He said that Tata group companies are supported by Tata Sons transparently in multiple ways --such as through licensed use of Tata brand.. and through direct and indirect financial support. 

"In addition wherever required by the company's boards of directors and management, Tata Sons provides group companies with strategic advice and support for acquisitions, divestments, large investments, business collaborations and leadership talent development," Tata said. 

Seeking to soothe nerves of the shareholders, he said: "If the current situation has caused you uncertainty in recant weeks, it is our firm resolve to focus the group on growth through induction of new leadership which is currently underway." 

Asking for their support in the fight against Mistry, Tata said: "As a long standing partner in the Tata Group companies, we seek your support of the EGM resolutions to enable our companies to continue in the path of growth and value creation, as they have done over their long-standing past history." 

(With PTI inputs)

Related Tags: Ratan TataCyrus Mistry
 
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