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'I am being sacked', Cyrus Mistry texted wife upon ouster from Tata Sons

22 October, 2017 4:27 AM
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'I am being sacked', Cyrus Mistry texted wife upon ouster from Tata Sons

A new blog post by ex-Tata Sons executive Nirmalya Kumar traces the chain of events on the day Mistry was sacked

‘I am being sacked’, said a text message by the-then Tata Sons Chairman Cyrus Mistry to his wife Rohiqa on October 24, 2016 - the day when a board meet resulted in Mistry unceremonious ouster from the conglomerate. In a blog penned by former Tata Sons senior executive Nirmalya Kumar, who was also asked to leave at that time, just five minutes before the board meeting Tata Sons board member Nitin Nohria had informed Mistry about the impending resolution.

“Cyrus, as you know the relationship between you and Ratan Tata has not been working. Therefore, Nohria continues, Tata Trusts have decided to move a board resolution removing Cyrus as Chairman of Tata Sons,� Kumar’s blog post states. In a post published on his personal blog today, Kumar has made a clear mention of the chain of events on the fateful day of Mistry’s sacking as Tata Sons Chairman.

Post that, Nohria told Mistry he has the option of resigning or facing a resolution for his removal at the upcoming board meeting. To this, as per the blog post, Ratan Tata interrupted to say he is sorry that things had reached this stage.

Kumar further writes that Mistry calmly responded saying ‘Gentlemen, you are free to take it up at the board meeting and I will do what I have to do.’ Post this, he sent the aforementioned text to his wife before heading to the board room at 14:00.

The blog post goes on to mention that Amit Chandra, another Tata Trusts' nominee, apprised the board that at a meeting of Trust Directors held earlier in the day it was agreed to move a motion to request Mistry to step down as Executive Chairman of Tata Sons. The reason he stated was, ‘because they (Tata Trusts) had lost confidence in him for a variety of reasons’.

In response to this, the post mentions, Mistry argued that the Articles of Association required a 15-day notice before taking up such an item for the board's consideration, and as such, the board's present action was illegal. However, Chandra responded saying the legal opinion obtained by the Trusts revealed that such a notice was not necessary.

After this, he proposed Vijay Singh to be elected as the Chair for the remainder of the board meeting. Despite repeated protests by Cyrus on the illegality of events, the posts says, Venu Srinivasan seconded the proposal. Ishaat Hussain and Farida Khambata said they would abstain on this motion to replace Mistry with Singh as Chair for the meeting. It was also proposed that Ratan Tata would be appointed interim chairman.

A quick vote was taken with six members (Ajay Piramal, Amit Chandra, Nitin Nohria, Ronen Sen, Venu Srinivasan and Vijay Singh) voting for, while Farida Khambata and Ishaat Hussain abstained. Vijay Singh was installed as Chair for the meeting.

The post adds that each of the resolutions was voted on in turn. While different board members proposed and seconded the individual resolutions, the voting pattern was identical across them. Khambata abstained on each, Mistry objected to each as being illegal, while the others voted for them.

“It was all over in minutes, no explanations and no opportunity for Cyrus Mistry to prepare a rebuttal,� Kumar said in the blog post.

By 15:00, Mistry returned to his office and begun packing his personal effects. He queried Subedar (FN Subedar, Chief Operating Officer), on whether he needs to return the next day. Subedar checks with Ratan Tata and reports that it was not necessary.

The post says that Mistry then called his childhood friend and top notch lawyer, Apurva Diwanji, for counsel. Diwanji arrived within 10 minutes and asked for the Tata Sons’ Articles of Association.

Post this, Mistry was whisked off to an associate’s office nearby so that he could get away from the media.

Kumar mentions they knew they needed a public relations agency and a lawyer immediately. However, he adds that Tata had already engaged six major public relations companies and booked many prominent lawyers in the country by then.

At 17:00, Tata Sons released a press statement announcing Mistry’s ouster and Ratan Tata being made interim chairman.

Immediately, the news broke across all Indian TV channels and spreads like fire on social media. It was also reported that three members of Mistry’s top team had been asked to put in their papers. While not the Chairman of Tata Sons, Mistry was still its board member and the Chairman of the Board of Directors at most of the major Tata Group companies. The media also started speculating whether Mistry would step down as chairman of these companies.

“CEOs being fired is always news, despite it not being a terribly uncommon occurrence. What made the firing of Mistry so unusual was that Tata Group had a history of only six Chairman over 148 years,� the post states.

Kumar, also adds, that Mistry was veted after a careful process that took over a year, and by assuming the role at the age of 46, he was expected to serve for 20-30 years.

“In general, the Tata Group is renowned for its values, which did not encompass a ‘hire and fire’ policy. Most senior Tata executives were consummate insiders, having usually served their entire career with the Group,� he mentions in his post.

The initial contract under which Cyrus was serving as Chairman had been passed via a Tata Sons shareholder resolution. It was due to expire on March 31, 2017. Instead of the sudden, no warning dismissal, the post states that the board could have just let the clock run out in five months.

After taking over as Chairman, Mistry had taken a year to put in place his leadership team. Called the Group Executive Council (GEC), it comprised of two old Tata hands and three people recruited from outside the group. Kumar was also hired to head strategy for the Tata Group.

During the board meeting at Tata House, Kumar with two of his GEC colleagues Harish Bhat and NS Rajan, were on a panel taking questions from around 100 young Tata executives on the group’s big data initiative.

The blog mentions that it is when Rajan went away and returned to inform them about Mistry’s ouster that they came to know. They later got to know that along with the Chairman, all three outsiders on the GEC (Rajan, Kumar and Madhu Kannan) have been let go.

Subedar, later, called all three to inform them that their services were no longer required.

The post mentions this was the beginning of a furious two months, where Kumar worked harder than ever with Madhu Kannan to help Mistry wage a battle against the enormously powerful Tata machinery until it moved on to the courts.

Kumar says that despite pressure, only two Tata CEOs - Bhaskar Bhat and Harish Bhat - have had anything negative to say about Cyrus Mistry in the press.

Source: moneycontrol.com

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