Power Struggle At The House Of 'Tatas'

With Cyrus Mistry continuing as chairman of top Tata Group companies, the power struggle is far from over.

- M.G. Arun

There was much anticipation as the board of directors of the Indian Hotels Company Ltd (IHCL), a Tata Group firm that owns the prestigious Taj Group of hotels, met at the iconic Bombay House, the headquarters of the $140 billion group. Cyrus Mistry, ejected a few days earlier as chairman of Tata Sons, arrived for the meeting amidst mayhem outside. Inside, there was unexpected bonhomie as Mistry chaired the meeting that took on record IHCL’s second quarter results. The board—with seven independent directors, including HDFC chairman Deepak Parekh, former Hindustan Lever chairman Keki Dadiseth and industrialist Nadir Godrej—approved the financial results, as the company, on a standalone basis, posted profits of Rs 27.65 crore for the quarter, compared to a loss of Rs 7.12 crore a year ago.

But what took everyone by surprise was what happened thereafter. In a statement to the Bombay Stock Exchange, IHCL’s independent directors expressed “full confidence” in Mistry as their chairman, and “praised the steps taken by him in providing strategic direction and leadership to the company”. This, they said, was to enable investors and the public at large, who trade in securities of the company, “to make an informed decision”. This move by the independent directors punctured, in the public eye, the allegations that Tata Sons had levelled against Mistry, removing him as its chairman in a boardroom coup on October 24, saying his tenure “was marked by repeated departures from the culture and ethos of the group”, without elucidating what exactly these departures were. The move also, to an extent, dispelled the popular notion that Mistry was fired for non-performance, and helped justify some of the arguments he had put forth in his letter to the Tata Sons board after he was shown the door.