In a major escalation of boardroom brawl at Tata Group, Cyrus Mistry was today ousted as chairman of Tata Global Beverages by a majority vote by board members, a move that Mistry slammed as illegal and inaccurate representation of board proceedings.
Seven out of 10 directors at the board meeting of Tata Global Beverages Ltd (TGBL), which co-owns and runs Starbucks coffee stores across India, voted for removal of Mistry as chairman of the company, the company said in a filing.
Mistry, however, will continue as a director of TGBL.
TGBL is the second listed company of the USD 103 billion Tata Group that has removed Mistry as chairman since the October 24 decision of the holding company, Tata Sons, to remove him as the head.
Last week, Tata Consultancy Services (TCS) removed Mistry as chairman but that ouster was not through a vote but by virtue of Tata Sons holding a commanding 73.26 per cent stake in the India's largest software services firm.
"The developments at the board meeting of the Tata Global Beverages Ltd is nothing but a repeat of the illegality that the Board of Directors of Tata Sons Ltd did on October 24," Mistry said in a statement issued by his office.
It claimed there was nothing on the agenda of the Board, a meeting of which was called to approve second quarter earnings, "about replacement of the Chairman just as there was nothing in the Tata Sons Board Agenda on October 24," it said.
Two out of the six independent directors on TGBL -- Darius Pandole and Analjit Singh -- voted against the resolution moved for Mistry's ouster. Ireena Vittal is believed to have abstained.
Tata Global Beverages Ltd (TGBL) said Harish Bhat, a non-executive director of the company, has been appointed chairman of the company.
Bhat is believed to be a confidant of Ratan Tata, who was brought back from retirement as interim chairman of Tata Sons after Mistry was shown the door.
In the statement, Mistry said Tatas continue to demonstrate the lack of respect for due process of law.
"Harish Bhat, an employee of Tata Sons proposed that Mr S K Santhanakrishnan be made Chairman at the meeting. This proposal was ruled out since there was already a Chairman for the meeting, namely, Cyrus Mistry.
"When the proposal to remove Mr Mistry was sought to be moved, it was ruled out by the Chairman since it was not on the agenda. The meeting was conducted by Mr Mistry as Chairman and was concluded," the statement by Mistry's office said.
The TGBL statement to the stock exchanges "is therefore inaccurate and illegal and it is but a repeat of exactly the same illegal acts done by Tata Sons Ltd on October 24," it said.
It added that two independent directors Darius Pandole and Analjit Singh "opposed the bid at committing these illegal acts."
Since taking over, the 78-year-old Tata has begun tightening his grip over the conglomerate.
Even after his removal as chairman of Tata Sons, Mistry continues to head several listed companies ranging from Tata Motors to Tata Steel and Tata Power.
Tata Sons has asked Tata Motors, Tata Steel, Tata Chemicals and Indian Hotels Co Ltd (IHCL) to call extraordinary general meeting of shareholders to remove Mistry from the board.
"The board of directors of the company considered the
continuance of Cyrus P Mistry as chairman of the company at its board meeting held on November 15, 2016," TGBL said in the regulatory filing.
"After extensive deliberations, and keeping in view the long-term interest and alignment of all stakeholders and stability of the company, the board of directors resolved to replace Cyrus P Mistry as chairman of the Company, by a majority vote, with 7 out of the 10 Directors present at the board meeting, voting in favour of the resolution."
The TGBL board has 10 members, excluding ousted chairman Mistry. Mistry's vote was not considered in deciding on the resolution moved by Tata Sons, which holds 35.27 per cent stake in TGBL.
Mistry would however continue on the board of TGBL as board of directors can remove a chairman. For removing a director, a vote by shareholders is necessary.
Sources said Tata Sons may seek an extraordinary general meeting of the shareholders to seek Mistry's removal as director.
TGBL's six independent directors are Darius Pandole, V Leeladhar, Mallika Srinivasan, Analjit Singh, Ranjana Kumar and Ireena Vittal.
The other directors are Harish Bhat, who has been today appointed chairman of the company, Managing Director and CEO Ajoy K Misra, Non-executive Director S Santhanakrishnan and Executive Director L Krishnakumar.
Among independent directors, Pandole is a partner at private equity (PE) fund New Silk Route (NSR) while Leeladhar is former CMD of Vijaya Bank and Union Bank of India.
Mallika Srinivasan is the Chairman and CEO of Tractors and Farm Equipment Limited. Analjit Singh is Chairman of Max India and Ranjana Kumar is former vigilance commissioner of the Central Vigilance Commission.
Ireena Vittal is former partner with McKinsey & Co.
On November 5, seven independent directors of Indian Hotels Company (IHCL) had strongly backed Mistry. Tata Chemicals independent directors had also come out in support of Mistry.
Last week, taking Mistry head on, Tata Sons sought his removal as well as that of the group's friend-turned-foe Nusli N Wadia from the board of three prime listed Tata group companies -- Tata Motors, Tata Chemicals and Tata Steel.
Tata Sons, which holds 26.51 per cent stake in Tata Motors, has asked the manufacturer of Jaguar Land Rover to convene an extra-ordinary general meeting of the company to consider its resolution seeking removal of Mistry and Wadia.
The latest moves are seen as attempts by Ratan Tata, who was brought in as interim head after sudden removal of Mistry, to seize back control of India's largest conglomerate.
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In TGBL, the promoters Tata group has 35.72 per cent shares as on September 30, 2016 in which Tata Sons, the holding company of the group has 23.50 per cent stake.
Another Tata group firm Tata Chemicals owns 7.10 per cent stake, followed by Tata Investment Corporation with 4.43 per cent stake.
Two another group entities Tata Industries and its investment arm Ewart Investments owns marginal stake of 0.12 per cent and 0.56 per cent.
TGBL operates in tea, coffee and water segments. It has a portfolio of several global brands which includes Tata Tea, Tetley, Jemca, Vitax, Eight O'Clock Coffee, Himalayan, Grand Coffee and Joekels.
The company has presence in several markets which includes the US, the UK, Eastern Europe and its over 65 per cent of revenue originates from markets outside India.
Besides, it also operates a joint venture with Starbucks called Tata Starbucks Ltd, which owns and operate Starbucks cafes in India.
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Meanwhile, speaking to a private news channel TGBL
Non-Executive Director S Santhanakrishnan said the board removed Mistry as Chairman for "stability and long terms growth" of the company and there was no illegality.
"It was not related with Mr Mistry's performance but we went with the larger issues and long term issues of the company as we did not want confrontation with the major shareholder. Hostility to any one is not good for the company... ," he said.
Santhanakrishnan further said: "Parent and I (TGBL) should have a good relationship. Tata are our parent, probably ever since the company has started, TGBL has Tata's name with it. It has nothing to do with the performance".
