Ousted Tata Sons chairman Cyrus Mistry has decided to dig in his heels after being ousted as chairman of Tata Sons and plans to continue in his current role at Tata group firms
In a major boost to ousted Tata Sons chairman Cyrus Mistry, independent directors of the group's hospitality arm Indian Hotels Co Ltd endorsed his leadership on Friday while expressing their 'unanimous' full confidence in him. The independent directors, including banker Deepak Parekh and Nadir Godrej, met ahead of the Tata group's loss-making company's board meeting and reposed faith in Mistry, who has been ousted as chairman of holding company Tata Sons.
Ratan Tata-led interim management of Tata Sons is seeking to oust Mistry from his positions in the operating group firms, including IHCL and Tata Motors. "The independent directors unanimously expressed their full confidence in Chairman Cyrus Mistry and praised steps taken by him in providing strategic direction and leadership to the company," Indian Hotels Co Ltd (IHCL) said in a BSE filing.
IHCL's independent directors also include Gautam Banerjee, Keki Dadiseth, Vibha Rishi and Ireena Vittal. The board of IHCL met after the meeting of the independent directors and approved the financial results for the second quarter ended September. The meeting was chaired by Mistry and it is not clear if the promoter group brought any supplementary agenda to remove Mistry. Besides Mistry, his sibling Shapoor Mistry, is also a director on the board of IHCL, as also his confidant and CEO Rakesh K Sarna.
Explaining the reasons for making public their views, IHCL said, "After deliberations, the independent directors came to a view that being a listed company, it was imperative for the independent directors to state their views to the investors and public at large, such that those who trade in securities of the company make an informed decision."
It is understood that Mistry has decided to dig in his heels after being ousted as chairman of Tata Sons and plans to continue in his current role at Tata group firms, including Tata Steel, TCS and Tata Motors, where he is the chairman. Sources close to him had stated that he has no plans to quit as chairman of these firms and "he will discharge his fiduciary duty as required by law in all his positions in the Tata group".
A day after he was ousted on October 24, Mistry had written a letter to the board of Tata Sons in which he highlighted many issues confronting the group firms, including IHCL. He had said many foreign properties of IHCL and holdings in Orient Hotels have been sold at loss. The onerous terms of lease for Pierre in New York are such that it would make it a challenge to exit.
Mistry also said that beyond flawed international strategy, IHCL had acquired the Searock property at a highly inflated price and housed in an off-balance sheet structure. "In the process of unravelling this legacy, IHCL has had to write down nearly its entire net worth over the past three years. This impairs its ability to pay dividends," he wrote.
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