Nothing seems to be working for Cyrus Mistry these days. After TCS, now Tata Power has also initiated the process his removal. The power major has informed the stock exchanges about it. An EGM will be organized on December 26 to remove Mistry from the position of director.
This was just the opposite of other companies board meets where Mistry has been a part of. Shareholders present at the meeting were also ready for the drama but all vain.
Mistry’s leadership was formally accepted and also appreciated at the Tata Power meeting. Mr. Homiar Vachha, director, also thanked him for his professionalism and complemented for leadership skills.
The Power major reported a sharp jumps in the profit in this quarter. In the second quarter of 2016, the power firm returned to profit. It reported consolidated net profit of Rs 336 crore v/s a loss of Rs 96 crore a year ago. Better performance by the subsidiaries helped in the revival. Lower mark-to-market losses at Mundra power project also supported the financials.
The CEO Anil Sardana mentioned that “Our subsidiaries continue to perform well despite challenging circumstances. Due to this we are confident that our strong growth trajectory will continue into the next quarter.”
The firm also notified in a filing to brochures that its major promoter Tata Sons has called for EGM. They want the removal of Mistry from the company’s board. Tata Sons nominee Sandhya Kudtarkar tabled this proposal. Board members approved it by voting. Tata Sons holds 31.05% stake in the power company.
It was a shocking development in corporate history of Tata firms. An unceremonious removal of Cyrus Mistry led to a start of the rivalry. Ratan Tata’s appointment also regarded as a reason for it. A team was also constituted to identify potential candidates for the leadership role.
This development caused the biggest rivalry between the two. This has also led to a bitter confrontation between the single-largest shareholder and the company’s founding family.
Recent board meetings of the group companies indicate a difficult road ahead for Tata Sons as few independent directors have backed Mistry. The independent directors of Motors, Indian Hotels and Chemicals firms have supported Mr. Mistry. Recently the steel and beverages arms removed Mistry from their baord.