New Delhi: Upping the ante, Tata Consultancy Services (TCS) on Monday charged its estranged chairman Cyrus Mistry with causing "enormous harm" to the company by his conduct and sought his removal from the company board.
In a notice to shareholders seeking his removal, India's largest software exporter said Mistry had "lost confidence" of Tata Sons - the company's largest shareholder and holding company of the USD 103-billion Tata Group.
It went on to cite benefits accruing to it from use of 'Tata' brand by Ratan Tata-led Tata Sons to back its recommendation for Mistry's removal.
Within weeks of Ratan Tata replacing Mistry as Chairman of the holding company of the group, Tata Sons by virtue of its commanding 73.26 per cent stake in TCS removed him as the chairman. It also asked the company to convene an extraordinary general meeting (EGM) of shareholders to consider removing him as a director on the board.
At its board meeting last week, which was not attended by Mistry, TCS decided to call an EGM on December 13.
In the EGM notice, TCS said, "Subsequent to his replacement as Executive Chairman of Tata Sons Ltd (TSL), Mistry has made certain unsubstantiated allegations, which cast aspersions not only on TSL and its board of directors, but also on the Tata group as a whole, of which TCS is an integral part."
Stating that the communication marked as confidential "was made public", TCS said: "Mistry's conduct has caused enormous harm to the Tata Group, TCS and its stakeholders, including employees and shareholders."
The move by TSL to replace Mistry with group veteran Ishaat Hussain as chairman of TCS was seen as an attempt by Ratan Tata-led promoter group to tighten grip over the salt- to-software conglomerate.
"The board of directors of the company is in agreement with... the removal of Cyrus P Mistry as director of the company, as the same would be in the best interests of the company," it said.
"The board of directors of Tata Sons, the holding company of the Tata Group, has "lost confidence in Cyrus P Mistry to lead Tata Sons for a combination of several factors," it said, adding that Tata Sons on October 24 decided to replace him as the removal "was absolutely necessary for the future success of the Tata Group".
TCS is the crown jewel of the Tata Group which "enjoys the right of use the 'Tata' brand name by virtue of the Tata Brand Equity and Business Promotion Agreement entered into between TCS and Tata Sons," the notice said.
"Substantial goodwill and benefits accrue to TCS by such usage of the Tata brand and association with the Tata group."
Even after being removed as chairman of Tata Sons, Mistry continues to head the group's several listed firms including Tata Motors, Tata Power, Tata Steel and Tata Chemicals.
The Board of Tata Global Beverages, the Indian partner of Starbucks Coffee, last week voted him out as the chairman. But he continues to be on its board and can be removed only by a shareholder vote.
Besides TCS, Tata Sons has asked Indian Hotels, Tata Motors and Tata Chemicals to call EGMs to consider removing Mistry as a director on the board.
Boards of none of these companies have so far decided on the date for EGM and TCS is the first company to fix a date for considering a Tata Sons-sponsored resolution to this effect.
As for his removal as TCS chairman, Mistry had termed the move as reflection of "cloak and dagger" machinations that define "the angry strategy of the Ratan Tata camp".
Last week, Mistry skipped two crucial board meetings -- of TCS as well as the group's holding company.
Even as Mistry skipped the board meeting of TCS, the family-appointed Chairman Hussain chaired the meeting and decided to convene the EGM on December 13. Mistry was also not present at TSL's first board meeting since his removal on October 24.
Last month, in a sudden and dramatic turn of events, Mistry was unceremoniously removed as the chairman of Tata Sons and replaced by his predecessor Ratan Tata in the interim, triggering a confrontation between the single-largest shareholder and the Tatas.
Comments
0 comment