Tata Chem faces risks owing to distrust in Mistry: Bhaskar Bhat

In conversation with CNBC-TV18, Bhaskar Bhat said that Tata Chemicals faces several risks due to loss of confidence of Tata Sons in Cyrus Mistry and his removal as Chairman of that company.Bhaskar Bhat resigned from the board of Tata Chemicals after its independent directors reposed faith in the ousted Tata Sons Chairman Cyrus Mistry.He said he requested Mistry to step down as the Chairman of the meeting and instead requested an independent director to chair. He further said he made that request to Mistry because he no longer remains the Chairman of Tata Sons which is also the promoter company of Tata Chemicals.He said he was talking about the risks that were connected with the fracture in the relation with him and Tata Sons. That is why he had made that request.Below is the verbatim transcript of Bhaskar Bhat’s interview with Shereen Bhan on CNBC-TV18.Q: You have tended in your resignation as a board member of Tata Chemicals late last night. We had a statement that was issued by the independent directors of Tata Chemicals stating that unanimously they supported Cyrus Mistry’s continuation as chairman. Why did you feel the need to resign? A: I think the independent directors had a right to say whatever they had and it somehow is seen as a statement made by the board itself and I am not saying that it was misrepresented. There are several risks Tata Chemical faces on account of the loss of confidence of Tata Sons in Cyrus Mistry and his removal as Chairman of that company. I therefore requested him to step down as Chairman of the meeting and instead permitted independent director to chair. Q: Who was the chair of the meeting if you asked Cyrus Mistry to step down, who chaired the board meeting? A: I requested him, I instead said let an independent director chair this meeting because as having being asked to step down as chairman of Tata Sons and Tata Sons is the promoter of Tata Chemicals, I naturally believe that you should not be chairing this meeting. I requested that and an independent director chaired the meeting. Q: But that request was declined? A: The risks that were connected with the fracture of the relationship with Tata Sons was what I was talking about and therefore I requested that he doesn’t chair. The risks were detailed out by me in the presence of the independent directors and Cyrus Mistry. There were no discussions addressing these risks and the independent directors instead went on to make a statement which did not take into account my view. Of course the board is the most important entity apart from the AGM in a company and therefore giving due respect to the board and the independent directors, I felt that I could no longer contribute to the board and chose to resign. Q: You said that you detailed out risks in the board meeting which were not represented in the statement that was issued last night by the independent directors. Can you take us through what were the key risks that you detailed in that board meeting? A: I am afraid I cannot talk about that because I respect the board and that is not right. It is just that there were risks and the independent directors’ statement instead talked about everything being as is where is and the great comfort and the board having great confidence. The company is going through significant turmoil and it has to be managed by the board and it is a great board and it will handle the situation but the risk, the statement simply did not address the risk. There is no need for the independent directors to make a statement like this but they have the right and I respect them and they made it and they have made it in the right spirit but simply did not take into account my views. I felt my services are no longer required so I did the right thing by stepping off the board and they should continue to contribute. It is a great company, it will do well. Q: Was there anybody else on the board who expressed your concerns as well, or raised similar concerns that you may have raised because the statement says it was unanimous that all board members felt exactly the same way; were you the only one who raised these concerns, where there any other members of the board who raised similar concerns? A: Please read the statement of the independent directors. The independent directors unanimously agree, they have not said that the board agreed. So, you should not read more into the independent directors’ statement. The independent directors unanimously agreed. Q: Did the executive members on the board raise concerns that you have also raised, you have talked about this rupture and this loss of confidence and how that could impact Tata Chemicals – were there executive directors who raised these concerns at the board meeting? A: At various points the executive directors did raise risks that the company would face. Certainly some independent directors as well had raised but these did not seem to -- every director knows that there are risks and I don’t recall exactly what risk was raised by whom but my point is my view was not perhaps taken into account because that statement did not reflect my views.