Mumbai: As the Tata Sons’ boardroom battle gets murky, a top source in the group said that Cyrus Mistry was given an ‘opportunity’ to resign but chose not to.
“Cyrus Mistry was given an opportunity to resign, he chose not to,” Reuters quoted a television report as saying.While Mistry has defended his strong decisions, the board felt he was not “cut out for the job”.
Following the ugly battle with the board, Mistry is expected to resign as the chairman of several group companies, Reuters quoted the TV report. Company insiders, however, are of the view that there is no urgency on Mistry to resign from the post in group companies.
Following Mistry’s letter that is critical of Ratan Tata’s all-purveying presence, top sources have said that it was the other way round. Many in the board felt that Mistry did not have what it takes to be a leader.
While many debate that the unceremonious and sudden exit of Mistry is unheard of in the Tata history, Tatas felt that while the manner of the removal is debatable, the decision is not. “There is no gentle way of removing a chairman, it had to be done,” said sources privy to the board’s decision.
It was not one decision but an accretion of things that led to the Tata board taking the tough decision of sacking its chairman.
On Wednesday, Mistry stunned the corporate world with a hostile five-page letter outlining governance failures, poor decisions and looming writedowns in the Tata Group, India’s most revered conglomerates.
Mistry’s email, leaked late on Wednesday, turned into a viral sensation, captivating readers on social media and prompting shocked headlines in leading dailies, as the government told politicians to stay out of what has become a public spat.
“I hope you do realize the predicament that I found myself in. Being pushed into the position of a ‘lame duck’ Chairman, my desire was to create an institutional framework for effective future governance of the group,” his letter read.
Stating that he inherited problems, he went on to raise corporate governance issues alleging representatives of family trusts, which hold two-thirds of Tata Sons shares, were reduced to “mere postmen” as they left board meetings midway to “obtain instructions from Mr. Tata.”
The country’s two largest stock exchanges, citing the leaks, have demanded clarity from Tata’s 27 listed units. At least one unit, Tata Steel, dismissed talk of write downs. But shares in all of the group’s major listed companies fell on Thursday.