 "Ratan Tata")
Tata Sons Interim Chairman Ratan Tata said the removal of Cyrus Mistry as Tata Sons Chairman was a "serious" and "well considered" move by its board of directors and absolutely necessary for the future success of the Tata group.
In a letter to employees on Tuesday, Tata said the "difficult decision" was made after careful and thoughtful deliberations by the board. "Your company and the Tata group are well-served. The directors on your boards and the empowered leadership of your companies continue to serve with the same degree of passion and ethical commitment as they have done in the past. As a group, we are steadfast in our resolve to maintain the Tata culture and value system that all of us have worked so hard to nurture over the decades," wrote Tata.
Tata wrote, "As I said in my meeting with the CEOs last week, the companies need to focus on their profit margins and their market positions vis-a-vis competition and not compare themselves to their past." He added, "The focus has to be on leading rather than following."
"While I am looking forward to work with you as Interim Chairman to maintain stability and continuity of leadership, I am looking forward with equal excitement to the finalisation by the selection committee of a world-class leader to be the new chairman of the group," Tata said.
Soon after Mistry's ouster last week, Tata Sons had set up a panel to select the next Tata group chairman.
Tata said during its long history, the group has faced and overcome many challenges. "Our employees have displayed their spirit at all times to create great companies that have delivered value to the shareholders."
He said Tata group comprised over 100 independent companies, operating across six continents. He added, "As a global enterprise, our companies must be leaders."
Tata's letter to the group's employees came after a leaked letter from Cyrus Mistry, former chairman of the group to the Tata Sons board in which Mistry warned that the group was facing potential write-downs worth $18 billion due to past acquisitions that went bad. Of this, the biggest would be in Tata Steel that is facing $10-billion of potential write-down due to its loss-making European operations. Mistry said Tata's Nano project was making losses and in its peak had lost Rs 1,000 crore in a single year. Mistry also talked about a Rs 22-crore fraud in Air Asia.
The Tatas, on the other hand, have dismantled the Group Executive Council set up by Mistry and three members of the council - Madhu Kannan, N S Rajan and Nirmalya Kumar - have resigned. The Vision 2025 prepared by Mistry and Kumar has been trashed.
The action is now expected to shift to the boardrooms of each individual group company where the board is expected to take a call whether Mistry should remain chairman or not. While Mistry can be removed as chairman if the board votes in favour of removal, he can remain as a director till the next shareholders general meeting when a voting could be held for his ouster, said a company law expert.
The Tata-Mistry feud is also expected to move to courts where Mistry is expected to challenge his ouster. The Tatas have already filed caveats in the Supreme Court, in High Courts and in the National Corporate Law Tribunal.
