MUMBAI (Reuters) - India’s Tata Sons has called shareholder meetings at group companies including Tata Motors and Tata Steel in an attempt to drive out former chairman Cyrus Mistry from the operating businesses of the $100 billion steel-to-software conglomerate.
Tata Motors Ltd (TAMO.NS), which owns luxury brand Jaguar Land Rover, said on Friday Tata Sons [TATAS.UL] had called an extraordinary general meeting (EGM) to vote on ousting Mistry as a director on the board of the automaker.
Tata Sons has a 26.51 percent stake in Tata Motors.
Holding company Tata Sons has also called EGMs at Indian Hotels CO (IHTL.NS), a Tata company that owns the Taj chain of hotels; Tata Consultancy Services (TCS) (TCS.NS); Tata Chemicals Ltd (TTCH.NS), and Tata Steel Ltd (TISC.NS) in a bid to vote Mistry off the boards of those businesses.
Tata Sons ousted Mistry as its chairman last month. While no immediate reasons were given, it was widely reported the holding company was unhappy with some of Mistry’s actions, such as the sale of assets across group companies. This led to a bitter war of words between the two camps.
Infrastructure company Shapporji Pallonji, owned by Mistry’s family, is a minority shareholder in Tata Sons and he remains a director on the board of the holding company.
On Thursday, Tata Sons removed Mistry as chairman of its main cash cow, TCS, where the holding company has a stake of more than 70 percent. Mistry remains, however, a director on the board of TCS.
Tata Sons has faced setbacks in its campaign against Mistry. The boards of both Indian Hotels and Tata Chemicals have both backed him to remain as chairman of those group companies.
Tata Sons is also seeking to remove Nusli Wadia, chairman of textile-to-aviation conglomerate the Wadia Group and a long-time independent director at several Tata group companies, from the boards of Tata Motors, Tata Chemicals and Tata Steel.
Wadia was reported to have voted in favor of retaining Mistry as the chairman of Tata Chemicals on Thursday.
On Friday, television news reports said a board meeting at Tata Steel to discuss second-quarter results had not taken a stance on the possible removals of Mistry and Wadia.
Tata Steel posted a consolidated net loss of 493.8 million rupees ($7.34 million), mainly due to a weak performance in its UK steel making business.
It has been in talks since July over potentially merging its European steel business, which also includes a steel mill in the Netherlands, with Germany’s ThyssenKrupp (TKAG.DE).
Lawyers have said removing Mistry as director of Tata group companies will be a bigger challenge than ousting him as Tata Sons chairman because he will have the right to be heard at an EGM and can also ask for an injunction.
All shareholders are invited to the EGMs and the decision will be made by a simple majority.
“This sort of a move is very unprecedented. I don’t know why the Tatas are doing it this way. They should be settling this instead of dragging this in public. Mistry has a lot of insider information,” a senior lawyer at a top corporate law firm in India said on condition of anonymity.
Details of EGMs are yet to be finalised.
Mistry’s office did not respond to a request for comment.
($1 = 67.2705 Indian rupees)
Additional reporting by Euan Rocha; Editing by Rafael Nam and Mark Potter