Boardroom battle frightens FIIs; Mistry wanted to double dividends to Tata Sons: Latest developments

Here's a recap of what you may have missed over the weekend

Cyrus Mistry and Ratan Tata

Amid on-going boardroom battle at Tata Group, Finance Ministry has asked financial institutions including LIC and banks to keep a watch on developments to safeguard the interest of investors. Meanwhile, there have been other major developments over the weekend too. Here's a recap of what you may have missed: 

FIIs nervous : FIIs are nervous  A group of foreign institutional investors (FIIs) which owns more than 10 percent in Tata Motors has reportedly expressed concern about Tata Sons being given information on product plans of Tata Motors. The group has written a letter to Tata Motors and include certain large US-based FIIs, an activist shareholder and sovereign wealth funds, reported Economic Times. ( Read more here) 

AirAsia execs had repeatedly warned Tata Group about lapses in business practices  Senior executives of AirAsia India had repeatedly complained to the company board and the Tata group about serious lapses in business practices but no action was taken by any major stakeholder, reports the Economic Times. It adds that two complaints highlighted that AirAsia India was being "run" by Malaysian parent AirAsia Bhd, in contravention of FDI rules, and that the Indian venture was being "overcharged" by the Malaysian company. Mistry reportedly promtly escalated the matter to the Tata Sons board and an investigation was sought. ( Read more here) 

Mistry had proposed to double dividend payout to Tata owners A Bloomberg report says Mistry had proposed to more than double the dividend holding company Tata Sons  would pay its shareholders by 2020 to about Rs800 crore ($120 million), compared with Rs 323 crore as of March 2016. The proposal counters accusations that the Tata Trusts -- the majority owner of Tata Sons -- had no visibility into the company’s future cash flows and were starved of information on group units.

I just got fired! Nirmalya Kumar writes a blog on his removal from Tata group: Nirmalya Kumar, a member of the ousted chairman Cyrus Mistry's Group Executive Council, lost his job along with Mistry in the surprise move that took corporate India by storm. Writing in a blog post, Kumar described how he got the news and what happened next. ( Read more here) 

Mistry camp expects support from other independent directors:Bolstered by the unanimous support from independent directors of Indian Hotels Company (IHCL), the Cyrus Mistry camp is banking on the independent directors of other listed Tata companies to follow suit, based on Mistry’s performance as chairman at the operating companies in his four-year term, say sources close to the Shapoorji Pallonji Group. ( Read more here) .

Tata to question motive of some independent directors
Moreover, the Tatas are likely to question whether some independent directors of Indian Hotels Company Ltd acted in a “truly independent” manner  and if all of them would come out clean on not receiving financial or pecuniary benefits from the Shapoorji Pallonji Group, reported Times of India ( Read more here) 

Tata investor meet rescheduled to next quarter; Tata Sons want to approach independent directors too
The Tata investor meet scheduled for November 18 has been postponed to next quarter as the eindependent directors of Indian Hotels backing Mistry may have caught the Tatas off guard. The Tatas reportedly now will reach out to other independent directors that are on the board of several other Tata entities to explain their side of the story and the reasons that forced them to remove Mistry from the chairman’s post at Tata Sons. 

Tata Sons also plans to seek shareholder votes in extraordinary general meetings  to remove Mistry from the boards of various operating companies if he does not step down voluntarily.

Mistry ignored Tata Trust advice to offload 5% stake in TCS
Another Times of India suggested that Tata Trusts wanted to sell up to 5% stake in Tata Consultancy Services (TCS) to help recapitalize some of the struggling group companies but Cyrus Mistry ignored this advice. In fact this one was one the suggesstions by Tata trustees as they felt the time was ripe for unlocking cash as TCS would find it tough to sustain the hefty dividend payouts going forward. ( Read more here) 

Tata-Mistry battles makes SBI red 

The tussle between Ratan Tata and Cyrus Mistry has got the country’s largest bank worried. State Bank of India (SBI) has advised Tata Sons, now led by Tata, and Mistry camps, to resolve the conflict in an amicable way to avoid any adverse impact on the working of operating companies in the group.

SBI has provided strong support to the Tata Group - under Ratan Tata’s tenure as group chairman in the past decade - through various financial instruments and guarantees, including high-profile overseas acquisitions such as Jaguar Land Rover and Corus. ( Read more here) 

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