Independent directors will hold the key at Tata Chemicals’ board meeting, on Thursday, to whether Cyrus Mistry will continue as chairman. The board will meet to announce the second quarter results.
Unlike the Indian Hotels board, which had six independent directors and all supporting Mr. Mistry, ousted Tata Sons chairman, Tata Chemicals has only four independent directors, with Ratan Tata’s old friend Nusli Wadia, being one of them.
It would be interesting to see if Mr. Wadia will back Mr. Mistry. Mr. Wadia is likely to back Mr. Mistry despite his friendship with Mr. Tata, the interim chairman of Tata Sons, said J.N. Gupta, co-founder and managing director, Stakeholder Empowerment services.
“Nusli Wadia, as an independent director in the board of Tata Chemicals and Tata Steel is likely to vote for Mr. Mistry.
“In fact, boards of all Tata operating companies are likely to favour Mr. Mistry, similar to what the Indian Hotels board did.
“In June, if you rate his performance as excellent, then how can you vote against him,” asked Mr. Gupta.
Mr. Gupta said Deepak Parekh, Nadir Godrej and Kaki Dadiseth too had favoured Mr. Mistry in the Indian Hotels board meet despite their long-term relationships with Mr. Tata .
Besides Mr. Wadia, other independent directors in Tata Chemicals board include, Nasser Munjee, Y.S.P. Thorat and Vibha Paul Rishi. Ms Rishi who had already backed Mr. Mistry in the Indian Hotels board meeting.
Industry watchers suggest that shareholder value could remain protected if independent directors continued to support Mr. Mistry as the chair of group companies However, if there is any divergence of views among the independent directors, it could mean that the board of the company becomes dysfunctional.
“If boards of listed Tata group companies are divided in their support of Cyrus Mistry, there is a risk of boards becoming dysfunctional which has operational implications for the companies. “We see three power centres are emerging within the Tata Group –Tata Trusts, Tata Sons and the operating companies. It’s a dangerous situation,” Amit Tandon, founder proxy advisory firm Institutional Investor Advisory Services (IiAS) said.
Source: The Hindu