Mumbai, Dec 7: Tata Sons' Interim Chairman Ratan Tata on Wednesday revealed that Cyrus Mistry was given a chance to voluntarily step down from the chairman's position which he declined, and was then formally replaced.
"Mistry was replaced as the Chairman of Tata Sons, after four years in that role, on October 24, 2016, because the Board of Tata Sons lost confidence in him and in his ability to lead the Tata Group in the future," Ratan Tata said in a letter addressed to the group companies shareholders.
"As you would expect, this deliberated action by the Tata Sons Board was taken after the relationship with Mistry steadily deteriorated, and several attempts to remediate went unheeded."
"As a final step, he was offered an opportunity to step down voluntarily from the chairman position, which he rejected, and said that it should be taken up at the Board. This was done and he was formally replaced."
Tata's letter, addressed to the stakeholders, comes ahead of the extra-ordinary general meetings (EGMs) that have been called by several Tata Group companies to remove Mistry from their respective boards.
"Since Mistry was appointed as a Director of various Tata Group companies only as a corollary to his being the Chairman of Tata Sons, the right step would have been for him to resign as Director," Tata said.
"Unfortunately, he has not yet done so, and his continued presence as a director is a serious disruptive influence on these company Boards, which can make the company dysfunctional, particularly given his open hostility towards the primary promoter, Tata Sons."
Ratan Tata elaborated that the holding company of the industrial conglomerate -- Tata Sons -- constantly evaluates new business opportunities and invests in creating new enterprises.
"Some of these investments have been hugely successful (e.g. TCS, Jaguar Land Rover) while some others (like Tata Steel Europe) have taken time to be profitable," the letter pointed out.
"Our approach has been to support and fund these businesses during their development and growth phases. We exit the business only when we believe it is unviable. In every situation, our capital allocation decisions are always based on maximizing long-term shareholder returns, viz. return on capital employed, return on equity and free cash flows," the letter read.
"So, there has always been, and will continue to be, a strong alignment of interests between us and the minority shareholders."