Tata Sons ousted chairman Cyrus Mistry on Thursday said that the group's governance framework needs urgent repair.
In a letter addressed to the stakeholders, which comes ahead of the extra-ordinary general meetings (EGMs) that have been called by several Tata Group companies to remove him from their respective boards, he said that ‘governance reform is a must at the level of Tata Sons’.
"It is for you to decide if such nature and quality of governance is acceptable to you in the oversight of your Company's operations. Necessarily, the governance framework needs urgent repair. This cannot happen in isolation at the level of your company. For the long-term interests of the Tata Group to be protected and for the interests of all stakeholders to be secured, Governance Reform is a must at the level of Tata Sons, and even more importantly, at the level of Tata Trusts," he said in the letter.
According to Mistry, it became evident to him that the Tata Group needs the highest norms of corporate governance - something beyond just the imagery that the name evokes and something that is truly institutionalised with rigour and discipline.
The 14-page letter -- "Representation under 169 of the companies Act, 2013. In respect of special notice for removal of Cyrus P. Mistry as Director" -- also said much of the Tata Group's capital was locked down in five "hot spots" which were dragging down performance.
Tata Trusts hold 66 per cent stake in the holding company of the industrial conglomerate Tata Sons.
"Prior to any group-level strategy development and consequent portfolio decisions, I felt a need to understand and assess the strategies of individual companies including your Company. It soon became apparent that much of the Tata Group's capital was locked down in five 'hot spots' which were dragging down performance. These put the entire Tata Group to risk and needed tackling on a war footing," he said.
"It was evident early on that our strategic risk management processes were not mature and robust. Our decisions affect not just shareholders, but every stakeholder, most vitally, employees and their families. I am proud to say that today some of our companies have in place the best enterprise risk management systems."
"The Tata Group is no one's personal fiefdom: it does not belong to any individual, not to the trustees of Tata Trusts, not to the Tata Sons directors, and not to the directors of the operating companies," Mistry said in the letter.
Mistry was sacked as Chairman of Tata Sons on October 24 in a boardroom coup because the board lost confidence in him and his ability to lead the Tata Group.
Since then, Tata Sons - the holding company of the USD 103 billion salt-to-software conglomerate - has sought to remove Cyrus from its group operating companies.
Following a special resolution moved by Tata Sons to remove Mistry as director, TCS has called an EGM on December 13, Indian Hotels Co Ltd on December 20, Tata Steel on December 21, Tata Motors on December 22, Tata Chemicals on December 23 and Tata Power on December 26.
