IHCL announced reported a turnover of Rs514.12 crore for the quarter ended September 2016 Image: Pikoso.kz / Shutterstock
In a significant affirmation of Cyrus Mistry’s leadership abilities, the independent directors of Tata Group firm Indian Hotels Co. Ltd (IHCL) publicly expressed their full support for their chairman.
After a much anticipated board meeting on Friday afternoon, IHCL issued a statement to the bourses detailing the outcome of a meeting of the company’s independent directors. The statement read: “Taking into account Board assessments and performance evaluations carried out over the years, the Independent Directors unanimously expressed their full confidence in the Chairman and praised the steps taken by him in providing strategic direction and leadership to the company.”
On October 24, Mistry was replaced as the chairman of Tata Sons, the flagship holding firm of the $103 billion-conglomerate, marking the beginning of a pitched power struggle in the corridors of Bombay House, the group’s headquarters in Mumbai. While the Tata Sons board voted Mistry out of the chairmanship, he still remains a director on the board of Tata Sons, by virtue of his family’s 18.4 percent stake in the company. Mistry, who is also a director and chairman on the boards of various listed and unlisted group companies, has shown no indications of stepping down from the positions he holds; and appears prepared to fight his case out till the end.
Re-affirmation of faith in his abilities by the independent directors of Tata Sons, which include the likes of Nadir Godrej, Deepak Parekh, Keki Dadiseth, Ireena Vittal and Vibha Paul Rishi, queers the pitch for Tata Trusts, the dominant shareholder of Tata Sons. Tata Trusts, which is helmed by Tata Sons’ former chairman Ratan Tata, has cited a trust deficit with Mistry as the reason for which it initiated the replacement of Mistry with his predecessor as interim chairman.
If Mistry continues to enjoy the support of the independent directors of the company, Tata Sons may find it difficult to remove him as chairman of IHCL, and will have a lot of questions to answer, if and when it tries to do so. The vote of confidence in his abilities may also be flashed by Mistry in his defense, if his fate in IHCL was to ever be decided by the non-promoter shareholders of the company; or the courts for that matter.
IHCL also announced its earnings for the September 2016 quarter on Friday and reported a turnover of Rs514.12 crore, up 8.8 percent of the same quarter a year earlier. The company reported a net profit of Rs62.18 crore in the July-September period, versus a loss of Rs17.76 crore in the September 2015 quarter. The profitability was mostly due to an exceptional income during the quarter.
Under Mistry’s leadership, the new management of IHCL, led by MD and CEO Rakesh Sarna was trying to put in place a turnaround plan that included sale of non-remunerative assets, especially outside India, and the implementation of various operational efficiency measures.
Meanwhile, the security guards at Bombay House assaulted members of the media who had assembled outside the Tata group headquarters on Friday.
A statement released by the Mumbai Press Club on Friday evening stated that at least three photographers were seriously injured in the attack and needed to be treated in a hospital. The Press Club statement called for the immediate arrest of the attackers.
"We deeply regret the incident during the entry of certain board directors today," Tata Sons said in a statement issued on Friday evening. "We profusely apologise to the press corp and their families for this incident. We will ensure that such a situation does not recur."