 "After TCS move, Indian Hotels to call EGM to remove Mistry as chairman")
Indian Hotels Company on Thursday announced that Tata Sons, a shareholder in the company, had called an extraordinary general meeting for the removal of Cyrus Mistry as director of the company. Mistry is currently the chairman of the company and just last week its independent directors had expressed their faith in his leadership. Tata Consultancy Services also announced that it has called a EGM to remove Mistry apart from replacing him as the Chairman of the company with a Tata group veteran, Ishaat Hussain.
The Tata group companies hold 39 per cent stake in Indian Hotels, the operators of the Taj group of hotels. The independent directors of Indian Hotels Company Ltd led by HDFC Chairman, Deepak Parekh and Keki Dadiseth had unanimously backed Mistry as the Chairman of the company and supported his move to turnaround the company.
“After deliberations, the independent directors are of the view that IHCL being a listed company, it was imperative for the independent directors to state their views to the investors and public at large, such that those who trade in the securities of the company make informed decision,” said a statement issued by the independent directors to the stock exchanges last week. Insiders said the support by independent directors has taken the Tata group by surprise and it would not vote in favour for the re-election of these directors as and when their term ends.
The Mistry camp is expecting similar support from independent directors of other Tata group companies like Tata Steel, Tata Motors and Tata Chemicals. Tata Chemicals board is meeting today in Mumbai.
Soon after he was ousted, Mistry had warned of $18 billion worth of potential write down in Tata group companies including in Tata Steel due to its European acquisition by former Chairman, Ratan Tata. He also blamed Tata for keeping acquisition of Sea Rock hotel in Mumbai in an off balance sheet company and making uneconomical acquisitions abroad.
An independent director on Tata Steel board has said Rs 70,000-Rs80,000 has already gone down the drain in Tata Steel’s European operations and it’s wrong to hang Mistry for the acquisition.
As per Mistry, the Tata group would need potential write down of $18 billion –across all group companies including the problem childs: Tata Steel, Tata Motors India operations and Tata Teleservices.
The Shapoorji Pallonji family owns 18.5 per cent in the Tata group holding company, Tata Sons. Tata Sons, in turn, holds 39 per cent stake in Indian Hotels.
On October 24th, in a dramatic turn of events, Tata Sons board had removed Mistry as the Chairman of the company citing “underperformance” and had scrapped his group executive council (GEC).
