'Shocked' Cyrus Mistry says removal unparalleled, terms board proceedings as invalid, illegal

MUMBAI: Cyrus P Mistry, who was replaced as the chairman of Tata Sons board on Monday by his predecessor Ratan Tata, has criticised the decision in harsh and scathing terms terming the move “unparalleled in the annals of corporate history”.
The decision, Mistry said in an email to board members and to the trusts, had left him “shocked beyond words”. He has also described the board proceedings as invalid and illegal.

Mistry alleged that he had not been allowed freedom of action to manage the affairs of the sprawling salt-to-software group, because of changes in the articles of association of Tata Sons which had reduced the power of the chairman.

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“I have to say that the board of directors has not covered itself with glory. To “replace” your chairman without so much as a word of explanation and without affording him an opportunity to defend himself...must be unique in the annals of corporate history,” Mistry said in the email.


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“The sudden action and lack of explanation has led to all manner of speculation and has done my and the group’s reputation immeasurable harm,” the former chairman said.

“The letter is to emphasise the total lack of corporate governance and a failure of the directors to discharge their fiduciary duty to stakeholders of Tata Sons and the group companies,” Mistry alleged. Responding to allegations of his lacking a corporate strategy, Mistry asserted he had presented the strategy 2025 to the Tata Sons board.

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Mistry said he had initially declined the offer made by Ratan Tata and Lord Bhattacharyya to head the group but lack of candidates pushed him to take up the offer after he was assured a free hand with Ratan Tata stepping back but being there to advise and guide him.

But this did not happen. Instead after the appointment, the Tata Trusts amended the articles of association, changing the terms of engagement between Trusts, Tata Sons board and the chairman, which severely constrained his ability to engineer a turnaround.

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The amendments to the articles had diminished the role of the Tata Sons chairman and had created “alternative power structures”. The directors nominated by the trust (Nitin Nohria and Vijay Singh) had been reduced to “mere postmen”, he claimed.

Mistry could not be reached for comment. An email sent to the spokesperson of Tata Trusts late on Monday evening remained unanswered at the time of going to press.


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In the email to the board, Mistry had said that the group’s foray into aviation by way of joint ventures with Air Asia and Singapore Airlines was at the behest of Tata. In both cases he had been presented with a fait accompli.

Mistry explained that the foreign acquisition strategy barring Tetley and JLR had resulted in a large debt overhang with the European steel business facing potential impairments of $10 billion.

He said that IHCL’s acquisition of the Sea Rock property in Mumbai pushed the company to write down nearly its entire net worth over the past 3 years, impairing its ability to pay dividend, while Tata Capital had enormous non-performing assets on account of loans to Southbased businessman Sivasankaran.

He said the telecom business was continuously haemorrhaging and a shutdown or a fire sale would have cost anywhere between $4 billion and $5 billion, in addition to a $1-billion payment to partner Docomo.