Tata Steel independent directors divided over endorsing Mistry

Mumbai: A nearly six-hour board meeting of Tata Steel ended without a statement supporting Cyrus Mistry as three independent directors — Mallika Srinivasan, OP Bhatt and Andrew Robb — cautioned that going against the parent Tata Sons would imperil the future of the steel giant.
The 11-member board also has Nusli Wadia, Subhodh Bhargava and Jacobus Schraven as independent directors, who supported Mistry and pushed for a statement endorsing him.Mistry, who was removed as Tata Sons chairman on October 24, has refused to quit the boards of operating companies and is banking on the support of independent directors. The independent directors of Tata Chemicals and Indian Hotels Company have backed Mistry’s leadership unanimously in recent days.
“Mallika, Bhatt and Robb said they were concerned more about the future of the company, than Mistry’s past performance. They advised that confrontation with Tata Sons will drag the company’s fortunes,” three people familiar with the matter said. Wadia vociferously sought an endorsement for Mistry as the board meeting, which started at noon, went into the evening.
This is the first Tata company where the independent directors were divided in the Ratan Tata versus Cyrus Mistry boardroom battle, and hence no decision with majority support could be taken. TAFE chairperson Mallika Srinivasan was travelling overseas and attended the meeting via video link. Mallika is also an independent director with Tata Global Beverages, but had skipped the company’s board meeting on October 26.
People sympathetic to Mistry questioned Mallika’s independence, citing the fact that her husband and TVS Group chief Venu Srinivasan is on the board of Tata Steel’s parent Tata Sons and had voted for Mistry’s removal on October 24. “If the Tatas are questioning the independence of the independent directors in Indian Hotels and Tata Chemicals who’ve supported Mistry, how can there be a different set of rules when it comes to directors who are supporting Bombay House,” said one of them.
Bhatt is also on the board of Tata Consultancy Services, which removed Mistry as its chairman on Wednesday. Robb, 73, is the chairman of Tata Steel Europe (formerly Corus), which Tata Sons under Mistry had proposed to restructure. The restructuring involved selling Tata Steel UK. Ratan Tata had acquired Tata Steel Europe in a mega $12-billion deal in 2007. After Cyrus’s removal from Tata Sons, the decision to sell the UK business may be reversed. On Thursday, Tata Sons said that it had received critical reports about Mistry’s handling of problems at Tata Steel Europe.
All six independent directors of Tata Steel supported Mistry’s signing the company’s quarterly results. Tata Sons didn’t move a resolution on Friday seeking his removal as the company chairman since it has already given notice for an extraordinary general meeting (EGM) of shareholders to drop him from the board. The EGM notice by Tata Sons, also issued on Friday, calls for removing Cyrus Mistry from the boards of Tata Chemicals, Tata Motors and Tata Steel.