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The ousted Tata Sons Chairman Cyrus Mistry appeared certain to be removed from the board of directors of Tata Consultancy Services (TCS) at an extraordinary general meeting (EGM) of the IT major’s shareholders on Tuesday.
Of the 197,04,27,941 total shares in TCS, 170,85,44,724 total votes polled. Holders of 86.71 per cent shares voted. Of this 93.11 per cent voted for removal of Mistry and 6.89 per cent voted against.
Although Mistry had himself, in a letter to shareholders, conceded that he did not stand a chance at the EGM. “Since the requisitioner’s stake (Tata) in the equity share capital of the company is over 73 per cent, the outcome in this particular meeting is a foregone conclusion. Yet, it is necessary for me to address this letter to you,” the letter said. “What I am fighting for is to save the soul of the Tata group,” he had added.
But the emotional appeal had no impact. Of the 38 shareholders who addressed the EGM, only five spoke in defence of Mistry and sought “specific reasons” for his ouster. Adil Polad Irani, the most vociferous of Mistry’s supporters, demanded to know from the company’s directors why Mistry needs to be removed when TCS’ performance during his tenure had been vastly superior than in previous years.
Questioning the “independence of independent directors”, Irani said the “learned” independent directors were supporting Ratan Tata “because Tata Sons tells them to do so.”
But most other shareholders said they wanted Mistry to leave because the public spat between him and the Tatas was hurting shareholder value. “This issue should have been handled internally. This is hurting the Tata group’s image,” said Rekha Shah, a shareholder who came to support the resolution for Mistry’s ouster.
Many shareholders said the issue should have been handled in a more mature manner.
“He (Mistry) should have resigned; instead he decided to wash dirty linen in public. Our value is eroding,” Aloysius Mascarenhas, another shareholder said.
Ratan Tata, along with RK Krishnakumar, walked in a little ahead of the EGM, to standing ovation from the shareholders. Citing his long association with the Tata group and of being on the board of Tata Sons, TCS interim chairman Ishaat Hussain recused himself from chairing the meeting. The EGM was then conduced by independent director Aman Mehta.
Mehta said the board had lost “trust and confidence in the nominated chairman, while this issue also had a material “negative effect on the company”.
The other board members who were present were TCS Chief Executive Officer and Managing Director N Chandrasekaran, executive director Aarthi Subramanian and independent directors Ron Sommer, Vijay Kelkar and OP Bhatt.
Top shareholders seek succession plan
Following the Tata-Mistry corporate battle, large shareholders of Tata group have sought succession and consistency plans to be put in place at earliest. “The large investors are worried about the impact on the market capitalisation of the group’s listed companies and negative publicity and sentiments around the unlisted companies,” a source close to the development told BusinessLine. Many of them had met top Tata group honchos on the matter, the source said.
LIC is one of the largest shareholders of the group’s companies, while there are a number of mutual funds and FIIs have also invested in Tata group’s listed companies.
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