(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
By Una Galani
HONG KONG Dec 14 (Reuters Breakingviews) - Ratan Tata has
been dealt a stinging rebuke. Barely half of independent
investors backed the removal of his protégé-turned nemesis Cyrus
Mistry as a director of Tata Consultancy Services. A
large insider shareholding at TCS, the Indian outsourcer that is
the crown jewel of the $100 billion-plus Tata conglomerate,
means Mistry will still get the axe. But the vote underscores
the urgency for the group patriarch to either fix governance or
take tighter control of group companies.
TCS was always going to secure the majority required to
remove Mistry, given the $64 billion company is 73 percent owned
by Tata Sons, the holding vehicle for companies in the wider
Tata group. But the underlying numbers are damning, with just 55
percent of votes cast by independent shareholders in favour.
Worse, around half of outsiders did not vote at all, marking an
unusually high level of abstentions. Put another way, only 28
percent of minority investors wanted Mistry out.
It looks like many large outfits abstained, to avoid taking
sides in one of India's biggest corporate controversies. Mistry
was abruptly removed from the helm of the group as chairman of
Tata Sons in October. Ratan Tata, his powerful predecessor, has
since returned as interim chair of the conglomerate and the pair
have engaged in a bitter war of words, with Mistry alleging "a
total lack of corporate governance" within the Tata empire.
The vote makes clear that there is considerable support for
Mistry's claims. Similar extraordinary general meetings will be
held in the coming days to vote on whether to remove Mistry from
posts at companies including Tata Motors, Tata Power
and Tata Steel - where Tata Sons does not
own a majority of shares. That puts pressure on Ratan Tata to
act decisively to address shareholder concerns, primarily by
revamping the board at Tata Sons. Alternatively, he needs to
increase Tata Sons' shareholdings to shore up its position.
On Twitter twitter.com/ugalani
- Tata Consultancy Services shareholders voted to remove
Cyrus Mistry as a director, according to results published on
- About 93 percent of shareholders in the Indian outsourcing
giant who cast their vote were in favour of removing Mistry.
Tata Sons and related entities own 73 percent of TCS.
- Mistry was in October ousted as a chair of Tata Sons, the
holding vehicle for companies in the wider Tata group. In
November, he was removed as chair of TCS in a special board
- However, the results showed that 45 percent of minority
shareholders voted against the resolution to remove Mistry,
including an overwhelming majority of non-institutional
independent investors. Turnout was high, with around 87 percent
of shareholders casting their vote.
- Three other group companies - Indian Hotels, Tata Steel,
and Tata Motors - will hold their shareholder meetings next
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(Editing by Quentin Webb and Katrina Hamlin)