Cyrus Mistry to Wage War from Outside the Chakravyuh

Finally, Cyrus Mistry has decided to fight from outside. In an eight-week long battle, it was largely perceived that Mistry would go all out to stumble India's iconic business man Ratan Tata, with the help of retail and institutional shareholders. The media-shy Mistry was seen indulged in back-to-back 'off-record' press briefings at the headquarter of his family business, Shapoorji Pallonji & Co. at Colaba in Mumbai during these days. He raised corporate governance issues in Tatas, pin pointed the 'hot spots' and alleged Ratan Tata's legacy worries in these meetings.  

On the other side, Tata Sons (read as Ratan Tata) was countering the allegations at each and every occasion, giving vague reasons for the removal of Mistry. It said that the actions of Mistry led to a loss of trust and a deterioration of the confidence of the Tata Sons board. "For over a year and a half, concerns were conveyed to Mistry. However, several attempts to remediate went unheeded," Tata Sons said in a presentation. The Tata Sons statements gave the impression that Mistry tried to hijack Tata group companies rather than executing the blue-print given by Tata.

Mistry's decision to exit from group companies came at a time when most of the leading group companies called up extraordinary general meetings (EGMs). At the first EGM on December 13, about 93 per cent of TCS shareholders voted in favour of Mistry's removal as director. However, the EGM raised the hopes of Mistry camp as 42.5 per cent of institutional shareholders and 78 per cent retail shareholders (of the voted) backed the ousted chairman. The next day, Tata Teleservices shareholders voted out Mistry.

For Tata, it was not tough to remove him from TCS as the promoters hold 73 per cent stake in the company. However, in other six companies--- Tata Motors, Tata Steel, Tata Power, Tata Global Beverages, Indian Hotels and Tata Chemicals --- the promoter's stake is minority (less than 50 per cent). So the eyes were on the outcome of EGMs, starting from Indian Hotels on December 20. Besides deciding the fate of Mistry, shareholders of three companies --- Tata Steel, Tata Motors and Tata Chemicals--- were supposed to vote on removing independent director Nusli Wadia, who backed Mistry.

What prompted Mistry to change his stand? He says in the statement, "…the objective of effective reform and the best interests of employees, public shareholders and other stakeholders of the Tata Group (the very people I sought to protect as chairman) would be better served by my moving away from the forum of the extraordinary general meetings. It is with this thought in mind that I have decided to shift this campaign to a larger platform and also one where the rule of law and equity is upheld."

Some translated it as "fear of loss". But Mistry is daring enough to face it. Others still believe that Mistry could have pulled out at least one big win. It is sure that some people mediated a truce. "For the larger interests of the 148-year-old Tata group, Ratan Tata is more important today than Mistry, who has a lot of time before him," an independent Tata insider cleverly puts it.

So, is it now going to be Tata's new chairman versus Mistry family?