Cyrus Mistry seeks government intervention to reform Tata Trusts, blames Ratan Tata for preventing reforms in Tata Motors

05 December 2016, 09:27 PM
Ousted Tata Group chairman Cyrus Mistry (Image Source: Getty)
Ousted Tata Group chairman Cyrus Mistry (Image Source: Getty)

Ousted Tata Group Chairman Cyrus Mistry stepped up his fight against Tatas and patriarch Ratan Tata while urging government's intervention to "remedy and repair breakdown" in the governance of trusts managing Tata Sons --the holding firm for more than USD 100 billion conglomerate.

In an apparent reference to Ratan Tata, Mistry also made a case for decision-making to be not concentrated in a single individual, saying conferment of all power in one man or a "high command" is unethical and a breach of trust.

Reaching out to shareholders of six Tata group firms, where promoters have called EGMs to remove him from their boards, Mistry said, "The Tata Group is no one's personal fiefdom: it does not belong to any individual, not to the trustees of Tata Trusts, not to the Tata Sons directors, and not to the directors of the operating companies.

"It belongs to all the stakeholders, including every one of you."

In his letter to shareholders ahead of the EGM to remove him from the group's crown jewel TCS on December 13, Mistry questioned why no reasons were cited for his dismissal and wondered if this was another case of Ratan Tata's arbitrary functioning.

"The impression sought to be created was that there was something unspeakable underlying his inexplicable and unreasonable conduct. More importantly, the signal was that Ratan Tata had an absolute right to do as he willed without having to explain himself to anyone," Mistry said.

"The conferment of all decision-making power in one man or a 'high command' among them is unethical, improper and a breach of trust. It is critical that serious decisions of severe magnitude and consequence are not taken whimsically, without much thought, or for unstated collateral objectives," said Mistry, whose family owns 18.4 per cent in Tata Sons.

Various Tata Trusts of which Ratan Tata is lifetime chairman, owns 66 per cent in Tata Sons, and are all public trusts.

It can be noted that over the last 40 days, Mistry has made pointed accusations like entering the aviation business, usage of corporate jets and lack of judgement in investments which had to be written-off.

"It is necessary to have a strong method of checks and balances in the trustees' decisions, particularly if decisions they take could indirectly give them personal benefits," he said in the letter.

Stating that his attempts to effect reform in the group's working were cut short with his abrupt dismissal on October 24, Mistry pitched for government intervention in the matter.

Also Read: Cyrus Mistry, Nusli Wadia to contest removal from Tata Motors at EGM

"In the absence of an appropriate governance structure and ethical behaviour of trustees, it would become an inherent obligation of the government to remedy and repair breakdown in the governance of such trusts," Mistry said. 

Ratan Tata prevented key reforms in Tata Motors, says Cyrus Mistry

Ousted Tata Group Chairman Cyrus Mistry alleged on Monday that Ratan Tata "undermined a key reform" for introduction of an "incentive linked to productivity" at Tata Motors by asking for public support from the auto major's labour unions.

In a scathing attack on Ratan Tata, Mistry in a letter to the shareholders of group firms, that have called for an extraordinary general meeting to remove him as director, said the "key reform measure" was undermined for getting the trade union's support.

"Tata Motors was close to finalising for the first time, a productivity-based agreement with labour unions. Ratan Tata called the labour unions and asked the union leaders for their public support and in return undermined the introduction of the incentive linked to productivity," Mistry wrote.

Also Read: Mistry, Wadia likely to address shareholders at Tata Steel extraordinary general meeting

The union leaders were paraded before the waiting media and Tata Motors did not get the benefit of a key work reform measure, he added.

On November 13, ahead of Tata Motors' crucial board meeting, two unions of the company representing around 16,000 employees had written to the management expressing their support to Ratan Tata.

In a letter to Tata Motors CEO and Managing Director Guenter Butschek, Tata Motors Employees Union, Pune expressed "deep concern" over the rift between Tata Sons and the leadership of Tata group companies.

Similarly, in a letter to the plant head of Tata Motors' Jamshedpur unit, Telco Workers Union termed Ratan Tata as "our another great leader" and invoked his saying "if you want to walk fast walk alone but if you want to walk far walk together" to express their support.

Tata Motors has called an extraordinary general meeting (EGM) on December 22 to seek shareholders' approval for removing Cyrus Mistry and Nusli Wadia as directors of the company.

Ousted from Tata Sons, Mistry continues as Chairman of the group firms like Tata Motors and Tata Chemicals.Tata Motors has called an extraordinary general meeting (EGM) on December 22 to seek shareholders' approval for removing Cyrus Mistry and Nusli Wadia as directors of the company.

In a sudden and dramatic turn of events last month, Mistry was unceremoniously removed as the chairman of Tata Sons and replaced by his predecessor Ratan Tata in the interim, triggering a confrontation between the single-largest shareholder and the Tatas.

Returning to Tata Sons after the abrupt removal of Mistry, Ratan Tata has moved quickly to consolidate his grip over USD 103 billion salt-to-software group by seeking to remove the ousted chairman from boards of major group firms.

TCS has called an EGM on December 13, Indian Hotels Co Ltd on December 20, Tata Steel on December 21, Tata Motors on December 22, Tata Chemicals on December 23 and Tata Power on December 26 to seek Mistry's ouster as director.

Even after being removed as chairman of Tata Sons - the holding company of the Tata Group, Mistry continues to head the group's several listed firms including Tata Motors, Tata Power, Tata Steel and Tata Chemicals.

Mumbai-based Tata Motors is India's largest automobile company, with consolidated revenues of Rs 2,75,561 crore in 2015-16.

First Published: Monday, December 05, 2016 08:33 PM
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