 "Tata Teleservices calls shareholders' meet on Dec 14 to oust Cyrus Mistry as director")
Unlisted Tata Teleservices has called an extraordinary general meeting (EGM) of its shareholders to remove Cyrus Mistry as a director on December 14 as part of the Tata group’s plans to remove him from the boards of all its group companies.
The meeting will be held on the fourth floor of Bombay House, headquarters of the Tata group, at 11 am. The EGM notice by Tata Teleservices said Tata Sons held a 36.1 per cent stake in the company and Mistry was being removed as Tata Sons had lost confidence in him.
The notice said substantial goodwill and benefits accrued to Tata Teleservices by its use of the Tata brand and its association with the Tata group. It added Mistry had made unsubstantiated allegations that cast aspersions not only on Tata Sons but on the Tata group as well.
Soon after he was removed as chairman of Tata Sons, Mistry had said the Tata group was facing potential writedowns worth $18 billion due to acquisitions and business decisions by interim chairman Ratan Tata. On the telecom business specifically, Mistry had said, “If we were to exit this business via fire-sale or shutdown, the cost would be $4-5 billion.”
Mistry had made these allegations in a letter to Tata Sons directors soon after he was ousted in a boardroom coup on October 24. The Tata Sons board had appointed his predecessor Ratan Tata as interim chairman on the same day.
The Tata Teleservices EGM will be held a day after TCS holds its EGM to remove Mistry from its board and just a week before a series of Tata group companies--Indian Hotels, Tata Steel, Tata Motors, Tata Chemicals and Tata Power — vote on similar proposals. As Tata Teleservices is unlisted and its shares are mainly held by Tata group companies, Mistry’s departure is almost certain.
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Mistry has claimed he was ousted by Ratan Tata when he decided to take legal action against C Sivasankaran, a confidant of Ratan Tata, over not paying Tata Sons Rs 700 crore to buy back Tata Teleservices shares. Ratan Tata has denied the charge. According to internal documents reviewed by this paper, Sivasankaran had in 2006 invested Rs 884 crore in Tata Teleservices in a preferential allotment at Rs 17 a share. Within a month the Tata group sold Tata Teleservices shares to Temasek at Rs 26 per share. The difference in the sale prices netted Sivasankaran a gain of Rs 468 crore.
A part of the money invested by Sivasankaran was financed by banks on guarantees and loans provided by the Tata group. NTT DoCoMo decided to buy a 26 per cent stake in Tata Teleservices at Rs 118 a share in 2008. Sivasankaran then sold a part of his stake and made an extra profit of Rs 209 crore.
When NTT DoCoMo exited Tata Teleservices at half its acquisition price in 2014, Sivasankaran, however, did not buy back Rs 700 crore of shares in accordance with an agreement with Tata Sons.
Mistry briefed the Tata Sons board about Sivasankaran’s default on September 15 and the board asked him to take legal action. But Sivasankaran issued a legal notice on September 19 to Tata Sons, Tata Teleservices and NTT DoCoMo alleging mismanagement of Tata Teleservices.
Sivasankaran claims he was a victim and not a beneficiary in the deal. “I suffered a loss of around Rs 3,000 crore in terms of capital and interest with my investment in Tata Teleservices. I did not repay the Tata Capital loan because we had filed for bankruptcy. Tata Capital wrote off the debt and kept the Tata Teleservices shares offered as collateral. We have no issues on that and we are not finding any fault with Tata Capital,” Sivasankaran told this newspaper in November.