Tata begins pruning Mistry from empire

Tata Consultancy Services, the cash cow for Tata Sons, ousted Cyrus Mistry as chairman on Thursday.

India's $100 billion steel-to-software Tata conglomerate sharply escalated a battle with its ousted chairman Cyrus Mistry, sacking him as head of the group's flagship business and blaming him for nearly pushing the group holding firm into losses.

Tata Consultancy Services (TCS), India's No 1 software services firm by revenue, removed Mistry as chairman on Thursday and appointed group veteran Ishaat Hussain as interim chairman.

Group holding company Tata Sons said under Mistry's leadership, it would have reported operating losses over the past three years if not for dividends from TCS. Tata Sons said "significant dependence" on TCS under Mistry's stewardship was a source of concern for its directors and shareholders.

TCS, the cash cow for Tata Sons, said it received a letter from top shareholder Tata Sons nominating Hussain as chairman.

"In view of this, Mistry has ceased to be the chairman of the board of directors of the company, and Hussain is the new chairman of the company," it said.

A source close to Mistry, however, challenged Hussain's appointment, saying the TCS board needs to approve it.

While the move to remove Mistry from the helm of TCS had been expected by analysts, interim chairman Tata is now working to wrest control of other key group companies still chaired by Mistry.

Indian Hotels, a Tata group company, said on Thursday it has called an extraordinary general meeting of shareholders to consider a resolution to remove Mistry as director. Mistry, however, is still chairman of key Tata group companies such as Tata Steel, Tata Motors and Tata Chemicals, whose board of directors will meet over the next few days to discuss quarterly results.

Tata Sons owns about 30 per cent stakes in these companies which means removing Mistry as chairman may not be as easy as in the case of TCS, in which Tata Sons' shareholding is more than 73 per cent, lawyers have noted.

Shares in TCS were down more than one per cent in late afternoon on Thursday and shares of Indian Hotels fell nearly four per cent, in a Mumbai market that was up 0.9 per cent. - Reuters