A day after Cyrus Mistry was removed as director of the privately-held Tata Industries, the focus turned to the first of the seven listed companies that have or will convene extraordinary general meetings (EGMs) to consider Mistry’s ouster from the board.
There was little doubt about the outcome of the EGM held by Tata Consultancy Services Ltd. (TCS) on Tuesday. Mistry stayed away from the EGM sending instead a missive to shareholders. In that he said the decision of the meeting was a foregone conclusion but said his “fight is a matter of principle rather than facing the foregone outcome”. Parent company Tata Sons owns 73.26 percent in TCS.
“What I am fighting for is to save the soul of the Tata Group,” Mistry said in his letter, which was read out to shareholders present at the EGM by the company secretary Suprakash Mukhopadhyay.
Tata Sons Interim Chairman Ratan Tata, Tata Sons General Manager Farokh Subedar, former Tata Sons board member RK Krishnakumar, along with Tata Sons board member and interim chairman of TCS Ishaat Hussain and the group’s legal counsel Bharat Vasani arrived ten minutes prior to the EGM. Tata sat in the front row along with his trusted colleagues. The meeting started with Hussain handing over the chair to Non-executive and Independent Director Aman Mehta, who presided over the shareholders’ meeting to avoid any conflict of interest.
Mehta began by reading out the Tata Sons proposed resolution to remove Cyrus Mistry as director. But he offered no explanation then. He then invited shareholders to speak. Of the 30-odd shareholders who chose to speak at the EGM, only four spoke in favour of Mistry.
The loudest among them was Adil Polad Irani, who expressed his opposition to Mistry’s removal and asked the TCS board to state clear reasons for supporting it. He also labelled TCS’ independent directors as ‘yes men’ for not questioning the promoter’s directive.
Emotions ran high outside the EGM venue as well, with shareholders milling in groups discussing the events of the last month. Many expressed their affection and loyalty for Ratan Tata, some were confused about the reasons for Mistry’s sacking. “There has to be some solid reason. Why are they saying he should be removed or sacked? Somethings are not very convincing for me,” a shareholder said.
At the end of the almost 3 hour long meeting, Mehta rose to respond to the key question - why was Cyrus Mistry being removed as director? He said TCS had brought this resolution to vote as its promoter shareholder, Tata Sons, had lost confidence in Cyrus Mistry. Mistry’s continued presence on the TCS board would have been detrimental for the company, Mehta added.
The Next Tata Sons Chairman?
Shareholders who spoke at the EGM also raised the issue of succession. Some urged Ratan Tata to consider appointing another Tata as the next chairman, hinting at Noel Tata, Ratan’s half brother and the chairman of the Group’s retail venture Trent Ltd.
A few TCS shareholders also expressed concern about TCS’ future if current Managing Director and Chief Executive Officer N Chandrasekaran was appointed Group Chairman. They feared the loss of leadership and the lack of a suitable successor at the country’s largest software company.
Late Tuesday night TCS announced the voting outcome via a media statement. Votes were cast for 86.71 percent of the total shares - of which 93.11 percent voted in favour of removal of Cyrus Mistry as director and 6.89 percent voted against the resolution. The bulk of the support for the resolution came from Tata Sons. Only 56.69 percent of institutional owned shares were voted on, of which just over half voted against Mistry. 42.54 percent of the institutional votes were cast in favour of the deposed chairman.
Mistry found popularity among retail shareholders as well. Only 17.71 percent of retail shares were voted on, of which 78 percent backed Mistry and only 22 percent voted for the resolution.
Tomorrow it’s the turn of unlisted company Tata Teleservices to vote on Mistry’s removal as director. Next week shareholders of four Tata companies - Indian Hotels, Tata Steel, Tata Power, and Tata Motors - will meet to vote on the fate of Cyrus Mistry as director of their companies.