MUMBAI: In yet another blow to Tata Sons, independent directors on Tata Chemicals board showed confidence in chairman Cyrus Mistry on Thursday and praised his previous decisions taken for the company.
The Tata Chemicals stock had lost 12% since his ouster from the board of the holding company Tata Sons on October 24, splitting the group into two power centres, with Ratan Tata heading Tata Sons and Mistry at the helm of most of the group’s listed companies. Since then, both the camps have traded allegations of misgovernance and incompetence.
“The independent directors also reaffirmed that all the decisions taken with regard to the operations and business of the company had been taken by the board and executed by the chairman and management as per the directions of the board,” Tata Chemicals said in a statement to BSE.
Tata Chemicals’ independent directors recalled and reaffirmed their earlier assessment and evaluation carried out in the last two financial years of Mistry, the board and its functioning, it said.
On November 4, the independent directors on the board of Indian Hotels CompanyBSE -5.99 % (IHCL), too, had unanimously backed Mistry.
JN Gupta, managing director at shareholder advisory firm Stakeholder Empowerment Services, said the boards of other Tata Group firms may follow suit.
“What happened in IHCL and Tata Chemicals will happen in all listed companies where Mistry is the chairman,” he said. “The independent directors will vote for him, because they will otherwise have to face uncomfortable questions,” Gupta said.
Responding to the IHCL stand, Tata Sons, its largest shareholder, has asked the company board to call for an extraordinary general meeting (EGM) to oust Mistry as a director of the company.
Independent directors of Tata Chemicals on Thursday referred to the minutes of earlier meetings, the outcome of which was with the entire board at that time. They also noted that Mistry’s recent reappointment as chairman gained 97.64% of the views cast.
The statement came after a meeting that stretched for several hours as the board sought to clear the air around the impact of the ongoing tussle between Tata Group’s present and former chairmen — Ratan Tata and Mistry.
Tata Chemicals on Thursday posted almost flat growth in the second quarter ended September with a consolidated profit at Rs 293 crore. Its standalone profit decreased 46% to Rs 118.8 crore. The company has a complex business portfolio and has currently called a halt to investments in fertilisers. It is seeking a buyer for the complex fertilisers business after the sales of its urea business to Yara Fertilisers in August.
Tata Chemicals is no longer a commodity business operating in regulated markets, but has businesses ranging from soda ash, edible salt, fertilisers, marine chemicals, pulses, spices and now nutritional ingredients and nano-materials.