India’s TCS ousts Mistry as chairman as Tata Sons steps up battle
MUMBAI – Tata Consultancy Services (TCS), India’s No. 1 software services firm by revenue, ousted Cyrus Mistry as chairman on Thursday, escalating a battle between the Tata group and Mistry who was also sacked as chairman of TCS’s parent last month.
Mistry was axed in October as chairman of Tata group holding company Tata Sons [TATAS.UL] and replaced by Ratan Tata as interim chairman of the $100 billion steel-to-software conglomerate.
A similar move to unseat Mistry from TCS, the group’s cash cow, was anticipated given the public spat that ensued between the two sides.
TCS said in a statement it received a letter from Tata Sons, its biggest shareholder, on Thursday, nominating Ishaat Hussain as chairman.
“In view of this, Mistry has ceased to be the chairman of the board of directors of the company, and Hussain is the new chairman of the company,” TCS said, adding Hussain will remain TCS chairman until a replacement is named.
Tata is now working to wrest control of other key group companies still chaired by Mistry.
Indian Hotels Co, another Tata group company, said in a separate statement on Thursday it has called an extraordinary general meeting of shareholders to consider a resolution to remove Mistry as director. Indian Hotels owns the Taj group of hotels.
Mistry, however, is still chairman of key Tata group companies like Tata Steel, Tata Motors and Tata Chemicals, whose board of directors will meet over the next few days to discuss quarterly results.
Tata Sons owns about 30 percent stakes in these companies which means removing Mistry as chairman may not be as easy as in the case of TCS, in which Tata Sons’ shareholding is more than 73 percent, lawyers have noted.
“In TCS, Tata Sons has a right to nominate the chairman,” a Tata Sons spokesman said.
Investors fear the split in leadership is likely to delay decision-making at the Tata companies, adding to the uncertainty at the group that is also battling Mistry’s allegations of failures in corporate governance.
Tata Sons has not given a clear reason for his removal as chairman but said it was due to a growing ‘trust deficit’ between Mistry, its directors, and Tata trust companies which collectively are its biggest shareholder.
It has also said Mistry’s tenure was marked by departures from the group’s culture and ethos.
But Mistry has received support from the management of some group companies. He received unanimous support as chairman from Indian Hotels’ independent directors at a board meeting last week, where he was praised for providing strategic direction and leadership.
Shares in TCS were up 1.6 percent as of 0630 GMT on Thursday, in line with the broader Mumbai market. They are down nearly 10 percent this year.
Meanwhile, Tata Sons has called for an extraordinary general meeting of shareholders to consider a resolution for removal of Mistry as TCS director as well.
Hussain, a director of several Tata companies, including Tata Steel and air conditioning and engineering arm Voltas Ltd, currently serves as chairman of Voltas and satellite television provider Tata Sky. -Reuters