Tata Sons brushed aside shareholder resistance as it began the process of removing its ousted chairman Cyrus Mistry from the Indian conglomerate’s listed subsidiaries.
The holding company’s 73 per cent stake in Tata Consultancy Services, by far the group’s most profitable unit, meant Mr Mistry’s removal as a director at the shareholder meeting on Tuesday was a foregone conclusion. The board of the IT services company had already stripped him of the chairmanship last month, two weeks after he was fired as Tata Sons chairman in a move that stunned the Indian market.
With many outside shareholders abstaining, 94 per cent of votes cast at the meeting backed the motion to remove Mr Mistry — but 45 per cent of non-Tata Sons votes were cast against the motion.
This was the first of six shareholder meetings at the group’s listed operating companies. Indian Hotels, Tata Steel, Tata Motors, Tata Chemicals and Tata Power are all set to hold votes on Mr Mistry’s removal over the next fortnight, which could produce closer results. Tata Sons has minority stakes in all five companies ranging from 19 per cent to 31 per cent.
Amount of non-Tata Sons votes cast against motion to remove Cyrus Mistry
Mr Mistry did not attend Tuesday’s meeting, where a chair stood empty on stage behind a card bearing his name. The company secretary read out a letter that the ousted chairman had written to shareholders, in which he said his campaign against his dismissal was “a matter of principle rather than facing the foregone outcome”.
Since his dismissal, Mr Mistry has waged a campaign to expose what he says are serious corporate governance failings at the group. Several shareholders spoke out at the meeting against what they called his sullying of the Tata brand, but Mr Mistry claimed in his letter that he was fighting “to save the soul of the Tata group”.
The influential proxy advisory firm Institutional Shareholder Services had advised TCS shareholders to oppose Mr Mistry’s sacking, saying that no “compelling evidence” had been provided to justify his removal.
Tata Sons has said that Mr Mistry presided over disappointing performance, and that he was devolving too much power away to the operating companies.
Mr Mistry’s dismissal was instigated by his 78-year-old predecessor Ratan Tata, who remains in charge of the Tata Trust charities that hold 66 per cent of the holding company’s stock.
Mr Tata has returned as chairman of Tata Sons on an interim basis. He wrote a letter of his own to shareholders last week, warning that Mr Mistry’s continuing presence on operating company boards threatened to destabilise the group.
Mr Tata, dressed casually and sitting in the front row of the audience at Tuesday’s meeting, was praised by several of the shareholders who spoke, although others criticised the group for failing to provide sufficient justification for Mr Mistry’s removal.
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