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Cyrus Mistry-Ratan Tata-Tata-Tata Sons
Reuters/Danish Siddiqui
Lesson learned.
WAR OF WORDS

Booted from Tata Sons, Cyrus Mistry doesn’t look like he’s going down without a fight

By Manu Balachandran

Cyrus Mistry has come out with all guns blazing against the Tata Group.

After maintaining a stoic silence since Oct. 24, when he was booted out as chairman by the board of directors at Tata Sons, Mistry has now made a scathing attack on the leadership of the 148-year-old group.

“I have to say that the board of directors has not covered itself with glory,” Mistry said in an email to the board of Tata Sons on Oct.25, according to the Economic Times newspaper. Tata Sons is the holding company of the Tata Group. “To ‘replace’ your chairman without so much as a word of explanation and without affording him an opportunity to defend himself…must be unique in the annals of corporate history.”

“The sudden action and lack of explanation has led to all manner of speculation and has done my and the group’s reputation immeasurable harm,” Mistry added. He said he was “shocked beyond words.” After all, Mistry is the first chairman of the group to be unceremoniously shown the door.

Moreover, the former chairman pointed out that some amendments made to the articles of association between the trusts, board, and the chairman had “diminished the role of the Tata Sons chairman” and led to “alternative power structures.” He also said that he was promised a free hand over the operations of the group, which wasn’t the case four years on.

An email to Tata Sons seeking comment on Mistry’s allegations has gone unanswered.

The 48-year-old Mistry, who was chosen by the board after an exhaustive hunt in 2011, has also questioned the corporate governance practices and the work ethic of the group. Before becoming chairman, Mistry had been a member of the board for five years.

“The letter is to emphasise the total lack of corporate governance and a failure of the directors to discharge their fiduciary duty to stakeholders of Tata Sons and the group companies,” Mistry said. The Tata Group has always claimed to take corporate ethics rather seriously, and has a widely held reputation for good governance.

Mistry’s decision to speak out comes a day after Ratan Tata, the former chairman who has now temporarily returned, said that he had retaken control in the “interest of the stability of and reassurance to the Tata Group.” The Tata group is yet to publicly disclose why they sacked Mistry, but media reports have pointed to performance issues, investor concerns and a growing rift between Tata and his successor.

Tata has moved quickly since retaking office. Yesterday (Oct. 25), the 78-year-old addressed the heads of various group companies and is currently studying their ongoing initiatives. Tata Sons also appointed Tata Consultancy Services CEO N Chandrasekaran and Jaguar Land Rover CEO Ralf Speth as additional directors to the board. The board has constituted a selection committee to find a permanent chairman for the group within four months.

In what could be the first move in a long-drawn tussle, the Tata Group has also filed a caveat against any legal action that Mistry might initiate against his removal. Mistry, on his part, has stayed put so far.

“Tatas have filed caveats seeking notice from Cyrus Mistry fearing legal action,” Mistry’s office said in a statement. “Cyrus has not filed any caveats. He has already made a statement that such concerns are misplaced at this stage.”