Indian firm Tata Steel have said after a special board meeting that they have decided to sack chairman Cyrus Mistry effective immediately, a move which follows Mistry’s exit from two other Tata Group firm’s and the group’s holding company Tata Sons.
Mistry has come under heavy criticism in the past few months and things came to a head in late October when Tata Sons deposed him from his position. In the last month both parties have let loose with a stinging volley of insults and criticisms, both blaming the other for issues at the $120 billion conglomerate.
Last week the board of Tata Steel held an extraordinary general meeting in order to oust Mistry and another executive, Nusli Wadia, from the directorship of the firm. A similar situation occurred last month at Tata Global Beverages, which runs Starbuck’s in the country, as Mistry was removed from that board too. He was also deposed as chairman of Tata Consultancy Services.
A close friend of Mr Mistry who prefers to remain nameless says there was a coup at the highest levels of Tata Group to eliminate his control at the executive level. The source described the behaviour of Tata Sons as “deeply unsettling”.
The new chairman of the board at Tata Steel will be O P Bhatt, a man with plenty of experience as current director of the company’s board.
The purge has not stopped there. Both Tata Motors, which owns Land Rover, and the Indian Hotels Co Ltd group, which is also part of the Tata Group and runs the Taj brand, have also called for extraordinary meetings in order to evaluate Mistry’s positions with the two firms.
“The main reason for Mr Mistry’s demise at Tata seems to be the falling dividends and skyrocketing expenses,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “Of course, when you fall out of favour at corporate level it’s very difficult to keep your standing at all the companies under the umbrella of the conglomerate. It’s a very long fall from that height and you tend to hit every branch on the way down.”
In the middle of November, Mistry attempted to defend the accusations levelled at him by releasing a statement in which he explained why the impairment provisions and other rising expenses were unrelated to his actions. He also accused the board of trying to sway shareholder sentiment towards him.
