Tougher days ahead for Mistry as Tata feud enters seventh week

Moneycontrol BureauThe most acrimonious boardroom drama in India’s corporate history has entered its seventh week and there are still no visible signs of a resolution. At the first of the many extra-ordinary general meetings lined up to reach a verdict on the Tata Sons – Cyrus Mistry feud, a large number of retail shareholders of Tata Consultancy Services Tuesday verbally expressed allegiance to the Group’s beacon Ratan Tata.

While so far boards of some group companies like TCS, Tata Global Beverages and Tata Steel have replaced Mistry as Chairman (subject to shareholder approval and likely to avoid conflict with the parent), Mistry continues to occupy the top seat at some of the other major group companies like Tata Motors, Tata Chemicals, Tata Power and Indian Hotels.

Experts including some shareholders who spoke to CNBC-TV18 said they firmly believe Mistry should have stepped down as Chairman gracefully when parent Tata Sons lost confidence in him. Few others, though, said the conflict between the parent and Mistry should have been sorted amicably as it has unsettled the group companies, which did not necessarily have any personal vendetta against Mistry.

VR Mehta of Tata Trusts says, shareholders of other Tata companies, like TCS, should now realise that dichotomy between a holding and operating company is not good and vote accordingly. Others like Suhas Tuljapurkar, Managing Partner of Legasis Partners and Shailesh Haribhakti, Chairman of DH Consultants point out that this battle also raises questions on the quality of information being made available to shareholders. Shareholders, meanwhile, seem to be stuck in a Catch 22 situation with a deluge of questions which remain unanswered. While some seek clarification on reasons compelling Mistry's sudden ouster, others question why Ratan Tata is not clarifying things himself. There are also question marks on why Mistry chose to stay silent on corporate governance isssues as and when they occurred. These questions have led some observers to suggest the whole affair be investigated by an external agency, which might ultimately turn out to be the case if the voting by group companies lined up over the next few days fails to reach a conclusion.