With Tata Industries voting out Cyrus Mistry as chairman at an extraordinary general meeting on Monday, Tata Sons has initiated the final leg of the boardroom battle on a firm footing, which could likely influence sentiment on December 13, when shareholders of group jewel TCS gather to vote on a similar resolution at the software company’s EGM.
According to people familiar with the group, the extraordinary general meeting (EGM) of Tata Consultancy Services (TCS) could also likely see similar voting pattern, since the promoter shareholding in the software major is 73.33%.
The two sides are, however, likely to spar on the representations that ousted chairman Cyrus Mistry intends to make ahead of the EGM for Tata Power, as the Tatas have only conditionally agreed to circulate Mistry’s stance.
While the Tatas scored the first victory at Tata Industries, “the result of the voting at this unlisted company was foregone as it is a largely promoter-driven company. But what is more significant is that Tata Industries is the vehicle for new businesses. Even the latest digital foray was via this company. So in that sense, it can be seen as a big loss for Mistry,” said a source in the group. The former chairman was personally driving the digital thrust.
Incidentally, Tata Industries was one company where both Mistry and group patriarch Ratan Tata seemed to have common aspirations. With investments of more than R1,500 crore, the fast-growing marketplace Tata Cliq, and the digital analytics and healthcare plans, Tata Industries was key to Mistry’s future plans.
The differences could get sharper in other group companies, including Tata Power, which has scheduled its EGM on December 26. While agreeing to circulate Mistry’s representation in compliance with the obligation under the Companies Act, Tata Power underscored that it had “received a letter from Tata Sons that certain specified items in the compilation (of documents supplied by Mistry for members’ inspection) contain confidential information of Tata Sons, which should not be made available for inspection. Accordingly such specified items will not be made available…”
This reluctance on access to information could trigger another war of words as the two sides had earlier outlined divergent views on the transactions approved by Tata Power board.
The companies have aired their opinions with Mistry talking about wrong business decisions to be the main reason for the company’s losses at its Mundra unit, which was built at a huge cost of $2.6 billion.
Tata Power had acquired coal mines in Indonesia at $1.2 billion with the intention of shipping them to India for generating power at Mundra. This plan, however, was hit when Indonesian regulations changed, making their coal very costly and hitting the long-term viability of the Mundra project. The Tatas have refuted this charge, saying it was a business decision taken after all consultations.
“There are data related to acquisitions, which are vital to the company. This should not be opened as it could be misused by rivals,” said the source quoted earlier.
It is also likely that the mention of contracts that were awarded by Tata Power would escalate tensions among the two sides.
Tata Sons did not comment on the issue.