Singapore: What does Cyrus Mistry want? Ever since his summary 24 October dismissal as chairman of Tata Sons Ltd, the spurned executive has demanded a reason for his sacking from the holding company of India’s $103 billion salt-to-software conglomerate.
At the same time, Mistry, 48, has accused Ratan Tata, the 78-year-old who wrested back control of the group, of everything from a control fetish to governance failures and bad judgment. According to Mistry, Ratan Tata’s 2006 purchase of Corus Group Plc’s British steel assets, his vanity small-car project as well as the acquisition of pricey hotels have exposed the empire that bears his family’s name to an existential threat.
Some of this could just be wounded pride, but even if Mistry’s allegations have a kernel of truth, what does he gain from trash-talking a group in which his family owns 18.4%? One possible answer is that he might—if he can convince enough outside investors in operating companies to side with him—prize open the loosely controlled conglomerate, and pluck out a big reward.
Tuesday’s shareholder meeting of Tata Consultancy Services Ltd, the software business, may have been a practice session in that treasure hunt. Tata Sons’ 73% stake in TCS was enough for Ratan Tata to get Mistry thrown out as its chairman. But at five other companies—Indian Hotels Co. Ltd, Tata Steel Ltd, Tata Motors Ltd, Tata Chemicals Ltd and Tata Power Co. Ltd—the founding group owns less than 40%. All of them hold shareholder meetings between 13 December and 26 December to vote on Mistry’s fate.
In three of them, he will have a formidable backer. Mistry’s own core supporters, fired together with him, have no clout. But Nusli Wadia, the scion of one of India’s oldest business families, is a heavyweight. He has spent a combined 90 years on three Tata boards.
At Tata Steel, where Wadia is the longest-serving independent director, he’s already questioning the validity of the company’s brand licensing agreement with Tata Sons, a younger company that received its first royalty payment 91 years after the steelmaker’s founding. Wadia wants an examination of the agreement.
A similar suggestion at Tata Motors, where Wadia has been on the board for 18 years, would be a thinly veiled call for mutiny. The ultimate prize may be Jaguar Land Rover, the crowning glory of Ratan Tata’s dealmaking career.
Tata Sons boosted its stake in Tata Motors by 1.7% on the day of the TCS vote, and is open to buying more ahead of the 22 December extraordinary general meeting. This must be the Wadia effect. Even at TCS, retail shareholders overwhelmingly voted against Mistry’s ouster. If Wadia’s PR spiel can swing enough of them away from Ratan Tata, the latter’s control of Jaguar Land Rover might be at risk, provided Mistry can raise money for an open offer to shareholders, a condition on which the market regulator may well insist. And that could split the empire.
On both sides, there’s much high-minded talk about values, and how the other camp was ruining the group’s reputation for fair play by cutting ethical corners. All that posturing diverts attention from what this spat is really about: Not UK steel plants laden with pension liabilities, nor US hotels saddled with exorbitant lease rentals, but a car key—or the key to a major global carmaker with a large, profitable market in China.
If that’s the end game, then the fight may be well worth it.