MUMBAI (TIP): The Tata Steel board on Nov 25 replaced Cyrus Mistry with OP Bhatt, an independent director, as the company’s chairman with a majority of the members voting in favour of the resolution. The 110-year-old metal giant’s decision is a fallout of the parent Tata Sons ousting Mistry as its chairman last month.
However, Mistry remains a director of Tata Steel. The company said Bhatt, who has been on its board for the last three years, will be the chairman till the outcome of the extraordinary general meeting (EGM) called on December 21 to remove Mistry as director.
The Mistry camp slammed the latest move as yet “another example of the unprecedented erosion in core Tata values”, which has seriously dented the most respected Indian corporate brand.
Six directors supported the resolution seeking Mistry’s removal as chairman, while three opposed it. Mallika Srinivasan, Ishaat Hussain, Adrew Robb, Jacob Schraven, D K Mehrotra and Bhatt backed Mistry’s removal. Nusli Wadia, chairman of Britannia and Bombay Dyeing, Subodh Bhargava, chairman emeritus of Eicher Group, and Mistry himself opposed the resolution.
Srinivasan is chairman of Tractor and Farm Equipment, while Hussain, who is on the board of Tata Sons, recently replaced Mistry as chairman at TCS. Robb is chairman of Tata Steel Europe, Schraven is ex-deputy chairman of Corus and Mehrotra is the former chief of Life Insurance Corporation. Of the six independent directors, four — Srinivasan, Bhatt, Robb and Schraven — backed Mistry’s removal.
This was the second board meeting of Tata Steel after Mistry was removed as chairman of Tata Sons last month
Tata Steel is the third listed group company that has replaced Mistry as chairman, after Tata Consultancy Services (TCS) and Tata Global Beverages. At TCS and Tata Global, group veterans Hussain and Harish Bhat were installed as chairman.
Tata Steel said that the board took note of the leadership changes at Tata Sons and had received a special notice from the principal shareholder to convene an EGM to remove Mistry as its director. “In view of the current situation”, the board, through a
“circular resolution dated November 25” passed by majority consent, decided to replace Mistry as chairman “with immediate effect”, Tata Steel said in a regulatory filing.
Tata Steel said that the board appointed Bhatt as chairman keeping in mind principles of good corporate governance and to provide impartial leadership to the company in its preparation and conduct of the EGM.
Mistry continues to be the chairman of four listed group companies — Tata Chemicals, Tata Motors, Indian Hotels and Tata Power. He is expected to chair the board meeting of Tata Power next week when the members gather to consider the company’s second quarterly earnings.
Five Tata Group companies have fixed EGM dates to remove Mistry from their boards (see graph). Tata Global Beverages and Tata Power are yet to announce EGM dates.
Three companies — Tata Steel, Tata Motors and Tata Chemicals — have also proposed the removal of Wadia, a long-time independent director, from their boards for not supporting Tata Sons in its move to oust Mistry from group companies.