October 21, 2017
On the evening of October 24, 2016, Tata Sons, the charity holding company of the Tata Group, announced the spectacular firing of Cyrus Mistry from the post of chairman.
The news, announced via a press statement released after a board meeting of Tata Sons in Mumbai, threw Dalal Street, business newspapers and corporate India into a tizzy.
October 21, 2017
On the evening of October 24, 2016, Tata Sons, the charity holding company of the Tata Group, announced the spectacular firing of Cyrus Mistry from the post of chairman.
The news, announced via a press statement released after a board meeting of Tata Sons in Mumbai, threw Dalal Street, business newspapers and corporate India into a tizzy.
Stocks of various Tata companies fell anywhere between 1 and 2.5 per cent the next day (Cyrus Mistry's ouster was announced after markets closed on October 24) as journalists frantically dialled sources in an attempt to figure out what had led to Mistry's firing.
Mistry was fired as the chairman of Tata Sons, which is the promoter of most of the companies that form the Tata Group behemoth, around four years after he took over the mantle from Ratan Tata.
Following Mistry's sacking, Rata Tata returned to the group's helm where he remained until earlier this year when Natarajan Chandrasekaran was appointed as the new Tata Sons chairman.
Mistry's exit from the Tata Group was shocking in part due to the conglomerate's tradition of stable leadership – the group has had just eight chairmen (including Chandrasekaran) over its 150-year history.
The firing quickly turned into one of India's most followed boardroom dramas as Cyrus Mistry and that Tata group traded allegations and counter-allegations.
Now, a former high-ranking Tata executive named Nirmalya Kumar has revealed what exactly happened on the fateful Monday of October 24 when Mistry was unceremoniously fired by the Tata Sons board.
Kumar, who too was fired on the same day, was the head of strategy at the Tata Group and was hired by Cyrus Mistry himself. Kumar was part of the six-member Group Executive Council, which was formed by Mistry around a year he took over from Rata Tata in 2012.
Writing a blog post, Nirmalya Kumar provided a near minute-by-minute account of how Cyrus Mistry was let go as chairman on October 24. Kumar's version of Mistry's firing was not independently verified by IndiaToday.in nor have the characters mentioned in the blog post commented publicly on the matter.
It all started, Kumar writes, with a knock on Cyrus Mistry's office door.
A SURPRISE VISIT
According to Kumar, on October 24, 2016, Cyrus Mistry was in his Bombay House fourth floor office, going over the agenda for a Tata Sons board meeting scheduled for 2pm.
Earlier in the day, rumour mills had churned out gossip that some of the Tata Sons board members had met in the morning for an informal meeting. But, since what had transpired between the board members was unknown, Mistry "did not give it (the meeting) much further thought", Kumar writes.
As he went over the agenda for the board meeting, a knock on his office door announced the unexpected visit of his predecessor Rata Tata.
THE BOMBSHELL
Rata Tata was accompanied by Nitin Nohria, a member of the Tata Sons board of directors. Nohria was and continues to be a Tata Trusts nominee to the Tata Sons board. The allied trusts hold a majority of Tata Sons's equity capital.
Inside Cyrus Mistry's office and with Ratan Tata by his side, Nitin Nohria proceeded to deliver the bombshell: "Cyrus," Nirmalya Kumar quotes him as saying, "as you know the relationship between you and Ratan Tata has not been working."
So, Nohria reportedly said, Tata Trusts had decided to move a resolution asking the Tata Sons board to remove Cyrus Mistry as chairman.
Kumar writes that Nohria went on to offer Cyrus Mistry two options: He could either write his own resignation letter or take the ignominious route of being fired by the board during the meeting that was minutes away. At this point, Kumar says, Ratan Tata "chimes in… to say he is sorry that things have reached this stage."
Mistry, according to Kumar, chooses not to go down without a fight and tells Rata Tata and Nitin Nohria that he will see them at the board meeting.
However, the chairman by that point seemed to realised the fate that was about to befall him.
'I AM BEING SACKED'
After their chat with Cyrus Mistry, Rata Tata and Nitin Nohria proceeded to the other end of the hallowed 4th floor of Bombay House, where the board room (sic) is located," Kumar writes.
Mistry quickly texted his wife, "I am being sacked" before making his way to the boardroom. There he sat in the chairman's chair and welcomed Rata Tata, who Kumar says had never been to a Tata Sons board meeting since handing over the mantle to Mistry.
Cyrus Mistry then informed the board that Ratan Tata and Nitin Nohria had some matters to discuss regarding the board meeting's agenda that was originally circulated.
At this point, Kumar says, Nohria told that meeting that Tata Trusts had asked its Tata Sons board nominees to propose moving a motion.
Amit Chandra, another Tata Trusts nominee, adds that directors of the Tata Trusts had met earlier in the day (likely the meeting that was rumoured to have been held earlier in the day) and had decided to move a motion asking Cyrus Mistry to step down as Executive Chairman of Tata Sons.
According to Kumar, Chandra said Tata Trusts had lost confidence in Mistry for a variety of reasons but did not elaborate more on the matter.
THE FIRST BLOW
Kumar writes that Mistry protested that the move was illegal as the introduction of any such motion required a 15-day notice period. Chandra, Kumar says, responded saying that the legal opinion obtained by the Trusts stated such a notice was not necessary.
Chandra then proposed that Vijay Singh, another Tata Trusts nominee, be appointed as the chair for the remainder of the Tata Sons's board meeting. Venu Srinivasan, an independent director, second Chandra's proposal even as Mistry continued protesting its illegality.
Voting soon followed with six directors – Ajay Piramal, Amit Chandra, Nitin Nohria, Ronen Sen, Venu Srinivasan and Vijay Singh – voting for the proposal. Farida Khambata and Ishaat Hussain abstained from voting.
'OVER IN A MATTER OF MINUTES'
With Vijay Singh installed as chair of the meeting, Venu Srinivasan proposed that inclusion of a total of seven resolutions on the agenda for the board meeting. The resolutions essentially dealt with the removal of Cyrus Mistry, the appointment of Ratan Tata as interim chairman, and the setting up of a committee to hunt for a new chairman.
The resolutions were put to vote and they were all passed under the same voting pattern, according to Kumar, who writes, "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."
THE DENOUEMENT
After the meeting, Cyrus Mistry went back to his office and begun packing his personal item. The now ex-chairman of Tata Sons asked the group's Chief Operation Officer FN Subedar whether he should return to office the next day.
Subedar, Kumar says, "checked with Ratan Tata and reported that it was unnecessary."
Mistry then called up friends, one of them a top lawyer, who whisked him away to the headquarters of Forbes & Company Ltd, a company related to Mistry's family firm, Shapoorji Pallonji.
There, sitting in a conference room, Cyrus Mistry finally came to terms with what had just happened. "Visibly shaken," Kumar writes, he asked for a cup of tea as he proceeded to figure out what his next course of action.
Ending the blog post, which also includes an account of how he himself found out about the news, Kumar says that Mistry's firing "was the start of a furious two months".
Courtesy/Source: India Today
