Tata Steel removes Mistry, names Bhatt as Chairman

Tata Steel removes Mistry, names Bhatt as Chairman , Tata Steel’s board passed a resolution on Friday replacing Cyrus Mistry as chairman and named independent director O.P. Bhatt as interim replacement. Mr. Bhatt, a former State Bank of India (SBI) Chairman, was appointed as an independent director of Tata Steel in June 2013.  “A special notice and resolution received from Tata Sons Ltd., the promoter

company was put to vote and was passed by majority consent,” Tata Steel said in a filing to the stock exchanges.

The board meeting was held at Bombay House in the afternoon.

Tata Steel shares rose 2.4 per cent to close at 407.70 rupees on the BSE.

Tata Steel said Mr. Bhatt will serve as chairman till the outcome of the company’s Extraordinary General Meeting (EGM), which has been convened on December 21.

“The board appointed the independent director as the chairman keeping in mind principles of good corporate governance and to provide impartial leadership to the company in its preparation and conduct of the EGM,” Tata Steel said in the filing.

“This decision was taken to also ensure stability to the Company and in the larger interest of Tata Steel’s stakeholders including but not limited to employees, trading partners, financial stakeholders and local community around its operations,” it added.

Tata Steel’s board had on November 11 decided to convene an EGM and place a resolution for the removal of Mr. Mistry as a director of the company at the advice of Tata Sons, which had ousted Mr. Mistry as chairman on October 24.

‘New low’

Reacting to the development, Mr. Mistry’s camp said corporate governance at the group under interim chairman Ratan Tata had hit a new low. “This unprecedented erosion of core Tata values, is seriously damaging brand Tata,” a statement citing sources close to Mr. Mistry read.

“Each time one thinks the current standard of corporate governance in Tata Group listed companies under the leadership of the interim chairman cannot hit a newer low, one has been belied.

“Just minutes before a convened and pre-scheduled board meeting, a circular resolution replacing the Chairman for the meeting is said to have been initiated. Those involved are representatives of Tata Sons, those drawing large remuneration from other Tata Trustee-controlled companies, and an “independent” director, who is the wife of a newly-inducted Tata trustee, who is also a recently nominated director of Tata Sons,” the statement read.

J.N. Gupta, MD, Stakeholders Empowerment Services, a proxy advisory firm said the board’s decision was appropriate as it was aimed at “protecting stakeholders’ value.”

“It is a battle between two individuals and the company should not be made to suffer in this fight. The board has a duty to stakeholders and not to any individual,” Mr. Gupta said. “This is a right decision.”

Tata Steel joined Tata Consultancy Services and Tata Global Beverages to become the third group company to replace Mr. Mistry as chairman. While Ishaat Hussain replaced Mr. Mistry at TCS, Tata Global named Harish Bhat as interim chairman.

IHCL convenes EGM

Separately, Indian Hotels Company Ltd. (IHCL), which owns and operates the Taj Group of hotels, convened an EGM on December 20, to consider and “if thought fit remove Mr. Mistry as director.”

Mr. Mistry’s removal has been initiated by Tata Sons, which holds 28.01 per cent stake in IHCL. Other Tata Group companies which have called EGMs to remove Mr. Mistry include Tata Motors and Tata Chemicals.