Tata Sons 'starved of key information' during Mistry's tenure

Tata Sons interim chairman Ratan Tata leaving Bombay House, the company's head office, in Mumbai. He has put together a new management team in the wake of Mr Cyrus Mistry's removal as chairman.
Tata Sons interim chairman Ratan Tata leaving Bombay House, the company's head office, in Mumbai. He has put together a new management team in the wake of Mr Cyrus Mistry's removal as chairman.PHOTO: AGENCE FRANCE-PRESSE

MUMBAI • As Mr Cyrus Mistry reset the course at Tata Sons - the holding company of India's largest conglomerate - his relationship with his board and largest shareholders frayed to breaking point.

Tata Trusts, which hold a stake of about 66 per cent in Tata Sons, had no visibility into the company's future cash flows and were starved of information on group units, people with knowledge of the matter said.

The holding company was becoming increasingly dependent on dividend payouts by Tata Consultancy Services as contributions from other firms dropped dramatically, said the sources, who asked not to be identified. Mr Mistry also did not heed calls to remove some members of his group executive council, even though staff costs doubled over his term.

Mr Mistry remains chairman of numerous group companies, while his predecessor Mr Ratan Tata, scion of the founding family, runs the holding company, setting up the 148-year-old conglomerate for a drawn-out battle between the two.

Tata Sons, which said a growing "trust deficit" resulted in Mr Mistry's removal, plans to propose extraordinary general meetings to remove the former head of the group from the chairmanship of group companies, the sources said.

A dual power structure "blurs the lines of accountability and creates confusion in the rank and file", Institutional Investor Advisory Services, a proxy adviser, said in a note.

Mr Mistry, who was chairman for almost four years, said in an Oct 25 e-mail to the board that he had not been given the opportunity to defend himself and warned that the group may face 1.18 trillion rupees (S$24.4 billion) in write-downs because of five unprofitable businesses he inherited. He did not disclose these concerns to Tata Sons during his tenure, the sources said.

Separately, Mr Tata has put in place a new management team, Tata Sons said in a statement on Friday.

The team comprises Mr S. Padmanabhan, who leads the Tata business excellence group and will also be group human resources head; Mr Gopichand Katragadda, who will continue in his current role as group chief technology officer; Mr Sanjay Singh, who will oversee public affairs in Delhi; and Mr Mukund Rajan and Mr Harish Bhat, formerly part of Mr Mistry's five-member advisory council.

Mr Rajan will continue to be responsible for ethics and sustainability, and will also oversee the group's international operations in the United States, Singapore, Dubai and China.

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A version of this article appeared in the print edition of The Sunday Times on November 06, 2016, with the headline 'Tata Sons 'starved of key information' during Mistry's tenure'. Print Edition | Subscribe