Ratan Tata says Mistry’s presence a ‘seriously disruptive influence’

MUMBAI: In his first communication to shareholders since the storm broke, Ratan Tata said Cyrus Mistry was appointed director of Tata companies only as a corollary of him being the chairman of Tata Sons. Now that Tata Sons has replaced Mistry as its chairman , the “right step” for him would be to resign from directorship of these Tata entities, he said.
The 79-year-old interim chairman said Mistry was replaced as Tata Sons chairman after the board “lost confidence” in him and his ability to lead the group.He said “this deliberated action” was taken “after the relationship with Mistry steadily deteriorated and several attempts to re-mediate went unheeded”.
Ratan Tata said Mistry was offered an opportunity to step down voluntarily, which he rejected saying it should be taken up at the board. “This was done and Mistry was formally replaced .”
“The right step would have been for him to resign as a director. Unfortunately, he has not yet done so, and his continued presence as a director is a serious disruptive influence on these company boards, which make the company dysfunctional, particularly given his open hostility towards the primary promoter, Tata Sons,” Ratan Tata said.
Tata Sons has sought Mistry’s ouster from the boards of TCS, Tata Steel, Tata Motors, Tata Power, Indian Hotels and Tata Chemicals . The holding company of the group has not yet moved a proposal to remove Mistry as a director of Tata Global Beverages.
The interim chairman’s letter to shareholders says “if the current situation has caused you uncertainty in recent weeks, it is our firm resolve to focus on the group on growth through the induction of new leadership which is currently underway”. Ratan Tata had earlier said that his successor would be in place by February 2017.
Ratan Tata said Tata Sons constantly evaluates new business opportunities and invests in creating new enterprises. It also supports Tata companies in multiple ways such as through licensed use of the Tata brand and through direct and indirect financial support.
“Some of the investments have been hugely successful— TCS, Jaguar Land Rover-—while some others like Tata Steel Europe have taken time to be profitable. Our approach has been to support and fund these businesses during their development and growth phases. We exit the business only when we believe it is unviable,” wrote Ratan Tata.