In a significant development of Tata-Mistry row, Ratan Tata on Tuesday hit back at ousted Tata Group chairman Cyrus Mistry saying that his removal was a was difficult decision but it was absolutely necessary for the future success of the Tata Group.
The interim Chairman wrote in a letter to over 6.6 lakh employees of $100-billion conglomerate, saying, “The decision to change the leadership of Tata Sons was a well-considered and serious one for its board members. This difficult decision, made after careful and thoughtful deliberation, is one the board believes was absolutely necessary for the future success of the Tata Group.”
The letter came shortly after Mistry ratcheted up war of words by rebutting “insinuations” of mishandling a dispute with Japan’s NTT DoCoMo, saying Ratan Tata was party to all decisions regarding the telecom venture.
Tata, who retired as Tata Group Chairman nearly four years back, justified his return for “maintaining stability and continuity of leadership” and promised to give the group a world-class leader when a fulltime boss is appointed.
Stating that he was excited to work with them once again, Tata, in his letter, sought to soothe them in the wake of high-profile top-level change and its subsequent public spat with Mistry.
“Your company and the Tata group are well served. The directors on your boards and the empowered leadership of your companies continue to serve with the same degree of passion and ethical commitment as they have done in the past,” he wrote.
As a group, Tata continued, “We are steadfast in our resolve to maintain the Tata culture and value system that all of us have worked so hard to nurture over the decades.”
Praising the spirit the employees, he said, “During its long history, the group has faced and overcome many challenges. Our employees have displayed their spirit at all times to create great companies that have delivered value to the shareholders.”
Earlier in the day, Mistry’s office issued a statement saying all decisions on the telecom joint venture with DoCoMo and the following dispute were taken with unanimous approval of Board of Tata Sons as well as family patriarch Ratan Tata.
The handling of the $1.17 billion compensation slapped by an arbitration panel over breach of agreement with DoCoMo is said to one of the triggers for Tata Sons sacking Mistry last month. “Insinuations that the Docomo issue was handled under the watch of Mistry in a manner inconsistent with Tata culture and values are baseless. The suggestion that Ratan Tata and the trustees would not have approved of the manner in which the litigation was conducted is contrary to what transpired,” the statement said.
Responding to the statement, a Tata group spokesman said, “The insinuations are being imagined and this (DoCoMo) matter is sub-judice.”
Tata in his second letter to employees after the October 24 sacking of Mistry, said the Group companies should focus on their profit margins and their market position and not compare themselves to their own past.
Meanwhile, Mistry has sought an appointment with Finance Minister Arun Jaitley, who also heads the Ministry of Corporate Affairs, but the Government has decided to stay clear of the boardroom tussle in India’s largest conglomerate, for now.
Mistry, the first non-family Chairman of Tata Sons, the holding company of the Tata Group, who was unceremoniously removed from his position last month, has sought an audience with Jaitley possibly to explain his side of the story. “But the Finance Minister has for now decided not to meet either side as the Government does not want to be seen getting embroiled in the Tata Group turmoil,” a senior Government official said.
Days after the disbanding of Group Executive Council set up by Tata Sons ousted Chairman Mistry, NS Rajan and Nirmalya Kumar have resigned from their respective board positions at Indian Hotels Company and Tata Chemicals.
Rajan resigned as a non-Executive Director with effect from October 28, Indian Hotels Company ltd, while Tata Chemicals’ non-Executive director Nirmalya Kumar has resigned from the board of the company with effect from October 31, 2016, according BSE filing. Rajan, Kumar and Madhu Kannan, another member of the erstwhile GEC, had also quit the Tata group last week.