Not so long ago, Cyrus Pallonji Mistry, known in corporate circles as CPM, seemed to be firmly in control of the Tata Group. On October 24, 2016, Ratan Tata reemerged from the shadows to take charge again and Mistry was shown the exit door. He has now even lost his position as a director in Tata Sons, despite his family's 18.4 per cent stake holding in the company -- the largest after the Tata Trusts.
Tata took three months and two weeks to wipe out all traces of Mistry from the software-to-steel conglomerate. Now the option left for Mistry is the legal route. By all accounts, Mistry is planning to fight a bruising and protracted legal battle, not for regaining his position but to expose Tata, sources say.
What is left for Mistry?
After being removed as chairman of Tata Sons, Mistry fought a losing battle to retain his top post in big group companies. Industrialist Nusli Wadia, who was a childhood friend of Tata, backed Mistry in his fight along with independent directors. Deepak Parekh and Adi Godrej sided with Mistry from the outside. Despite that support, Tata successfully managed to remove him from the chairmanships of group companies and voted him out from the TCS board with the help of financial institutions. Later, Mistry himself decided to quit from the remaining boards of group companies, keeping his position only in Tata Sons.
Mistry's family firms filed petitions in the National Company Law Tribunal (NCLT) and tried to stop Tata Sons shareholders' meeting, which was scheduled to remove him from its board. The tribunal and, later, the appellate tribunal ruled in favour of Tata and Mistry was removed from the Tata Sons board on February 6. Surprisingly, Noel Tata, half-brother of Tata but brother-in-law of Mistry, and his mother Simone Tata voted in favour of his removal through proxy.
Mistry can't come back on the board as the shareholders of the company elect the board members. It means each candidate should get majority vote from shareholders to be elected as director.
Tata has smartly ousted Mistry from group companies with the help of financial institutions--- they hold 30-40 per cent stake in some companies. The financial institutions believed that the group companies could not exist without the backing of Tata Trusts and Tata Sons. This situation will continue and Mistry will not have any role in the business of group companies. But he will continue questioning the decisions as a minority shareholder.
Then, Mistry will also continue his legal battle against Tata and the board of Tata Sons and the trusts. The tribunal will handle each allegation by Mistry separately, and it will be a headache for Tata and his team. He has levelled a series of allegations including those relating to fraudulent transactions, unethical practices and conflict of interest. Flagging corporate governance issues, Mistry has questioned the investment decisions of Tata including in loss making overseas assets of Indian Hotels, Nano, Tata Steel Europe, Tata Power's Mundra ultra mega project, Tata-Docomo and aviation joint ventures.
Mistry will make a forceful defense of his stated positions in the battle against Tata. He can't be written off just yet.