Tata Motors independent directors steer clear of taking Tata, Mistry sides

The Tata Motors board on Monday appeared neutral to the ongoing Tata-Cyrus Mistry spat. The second-quarter (Q2) results declared earlier in the day, though did not seem so immune to it. On October 24, in a sudden move, Mistry was removed as the chairman of Tata Sons, the holding company for all its operating businesses. But Mistry remains non-executive chairman of Tata Motors and other group companies. Tata Sons has called for emergency general meetings to oust him from these businesses. Nusli Wadia, an independent director at Tata Motors, Tata Chemicals and Tata Steel, who has apparently been showing solidarity with Mistry is another person that Tata wants out. After yesterday, however, many are interpreting the outcome as a setback for Mistry as the independent directors have not "really" openly backed him.

The Q2 results too did not keep the mood up at Tata Motors either. Though the company posted a consolidated profit, after tax, of Rs 848 crore for the quarter, against a loss of Rs 1,740 crore for the same period last fiscal, it fell short of expectations. A Bloomberg poll had pegged profit at Rs 2,768 crore. Consolidated revenues for the quarter were at Rs 6,799.7 crore, slightly up by 6.94 percent against analysts' expectation of Rs 65,919 crore. Earnings before interest and tax stood at Rs 6,282 crore against Rs 8,559 as expected. The stock on Tuesday took a hammering.

The mood last evening at the 11-member Tata Motors board was set by Nasser Munjee, an independent director of the company and of Tata Chemicals. Munjee was the most vocal. He said at the end of a six-hour meeting that they were "trying to avoid any conflict" and were acting as independent directors -- there are six of them -- who were "just worried about the company". He added that neither were they in Cyrus Mistry's camp as were being accused of, nor were they to choose a chairman. "It is for the shareholders to decide who they want as chairman."

Earlier in the day, Tata Motors issued a statement to the stock exchange that, "The independent directors have confirmed that all decisions taken by the board with regard to the strategy, operations and business of the company have been unanimous and executed by the chairman and the management accordingly." The statement added that that the independent directors further affirmed that the company continues to be governed, supervised and managed under the guidance and direction of the board."The management of the company and its subsidiaries have the full confidence and support of the independent directors."

Following the statements by the Tata Motors directors, many in the camp of the company are saying that the directors sort of went against Mistry and opposed what he had been saying about certain "unilateral" and "emotional" decisions taken at the company, at the heart of which is the Tata Nano project. However, quite a few in the Mistry camp are arguing that the Tata Motors' board outcome yesterday was closer to what Tata Chemicals and India Hotels Co. Ltd. (IHCL) have been saying. While IHCL directors not only openly showed "full confidence" in Mistry, they also praised him for his strategic directions and leadership. Tata Chemicals independent directors, meanwhile, "unanimously affirmed their confidence in the board, its chairman (Mistry) and the management."