Tata Steel's board of directors today decided to remove Cyrus Mistry as company chairman. Independent director O P Bhatt has been elected as the interim chairman of the company till the outcome of extraordinary general meeting (EGM).
"The Board appointed the independent director as the Chairman keeping in mind principles of good corporate governance and to provide impartial leadership to the Company in its preparation and conduct of the EGM," Tata Steel said in a regulatory filing.
Mr Bhatt was appointed as an independent director of the company on June 10, 2013. Earlier, he has served as the chairman of State Bank of India (SBI). Apart from this, Mr Bhatt serves as an independent director on the boards of several companies including Standard Chartered Bank, Tata Consultancy Services (TCS) and Hindustan Unilever.
"This decision was taken to also ensure stability to the Company and in the larger interest of Tata Stee's stakeholders including but not limited to employees, trading partners, financial stakeholders and local community around its operations," Tata Steel added.
In the ongoing tussle between the Tatas and Mr Mistry, the group's crown jewel Tata Consultancy Services had earlier this month removed Mr Mistry as chairman and appointed group veteran Ishaat Hussain as interim chairman.
In a nine-page statement to the media, group holding company Tata Sons said that under Mr Mistry's leadership, it would have reported operating losses over the past three years if not for dividends from TCS.
The EGM of Tata Steel will be held on December 21.
On October 24, Tata Sons board had sacked Mr Mistry as chairman on charges of non-performance and replaced him with Ratan Tata. Since then, a number of allegations and counter allegations have been levied by the warring parties with Mr Mistry finding support from industrialist Nusli Wadia, who serves as an independent director in a number of Tata group companies.
Mr Mistry's removal from the position of Tata Steel chairman has not gone down well with his supporters.
Post official announcement of Mr Mistry's removal, sources close to him said: "We believe that this unprecedented erosion of core Tata Values, is seriously damaging Brand Tata. Each time one thinks the current standard of corporate governance in Tata Group listed companies under the leadership of the Interim Chairman cannot hit a newer low, one has been belied."
"Just minutes before a convened and pre-scheduled Board Meeting, a circular resolution replacing the Chairman for the meeting is said to have been initiated. Those involved are representatives of Tata Sons, those drawing large remuneration from other Tata Trustee-controlled companies, and an "independent" director, who is the wife of a newly-inducted Tata trustee, who is also recently nominated director of Tata Sons," the sources added.
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