Mumbai: Tata Sons Ltd is set to move a resolution to eject Nusli Wadia from the board of Tata group companies, including Tata Steel Ltd, Tata Chemicals Ltd and Tata Motors Ltd, said a Tata group official, who declined to be identified, on Friday.
The development comes close on the heels of Tata Chemicals’ board meet on Thursday.
In a blow to Tata Sons’ efforts of removing Cyrus Mistry from the board of Tata Group companies, Wadia, among other independent directors of Tata Chemicals Ltd backed Mistry as chairman of the board. The directors took into consideration evaluation of his performance for the past couple of years as their reason for backing him.
Besides Wadia, the seven-member board of Tata Chemicals has independent directors, inlcuding Y. S. P. Thorat, Vibha Paul Rishi, and Nasser Munjee.
“A decision has been taken to move a resolution to remove Nusli Wadia. A notification will be issued shortly,” said the official cited above.
A resolution is set to be moved at shareholders’ meeting.
“Its in the interest of all the stakeholders. A discord between the promoter and directors of the operating companies is a recipe for disaster,” he said.
The Tata group spokesperson did not immediately respond to an email seeking confirmation.
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The move indicates that Tata-Mistry spat has entered a new divisive phase drawing clear lines between those who support Ratan N .Tata and those backing Cyrus P. Mistry in the 18- day old battle, which has been marked by allegations and accusations.
In a separate development, Bhaskar Bhat, a non-executive, non-independent director on the board of Tata Chemicals Ltd resigned.
In a letter to Cyrus Mistry, Bhat said the content in the statement by independent directors ‘dilutes’ his views expressed in the board meeting.
“The contents as well as the spirit of the statement completely dilutes the views I expressed at the Board meeting today especially regarding the threat the company faces on account of loss of confidence of the promoter Tata Sons in the chairman of Tata Chemicals Limited. Several important issues of discomfort I expressed seem to have been totally ignored. I therefore hereby tender my resignation as director of Tata Chemicals, with immediate effect,” Bhat said in his letter.
Wadia, a chairman of Bombay Dyeing and Britannia Industries, has been an independent director of Tata Chemicals since 26 June 1981, Tata Steel since 12 August 2005 and Tata Motors since 22 December 1998.
Wadia is believed to have played a pivotal role in the ouster of Russi Mody from Tata Steel. “After the removal of the chairman, it makes sense to reconstitute those boards, it has to be seen how the articles of association of various companies permits it. If the current dissonance continues, it is more damaging,” said the Tata Group official cited earlier.
Shriram Subramanian, managing director at InGovern Research, a proxy advisory firm, expects most of the independent directors on the board of companies for which Tata Sons moves a resolution seeking Mistry’s removal, to resign if Mistry is voted out. “If Mistry loses in the EGM, the position of the directors becomes very untenable,” said Subramanian.
