The NCLAT ruling leaves the Tata group rudderless as it faces a string of urgent decisions.
For
more than 150 years, the Tata
Group has been synonymous with India’s nation-building project,
venturing into everything from autos to airlines when its country
needed them. And no executive better personified the country’s
emergence on the world stage than Ratan Tata, whose string of
dazzling takeovers took a largely domestic firm global.
Now
at 81, Tata’s legacy is under threat. An internecine war over the
conglomerate’s future took a crippling turn Wednesday, highlighting
that even the famed Tatas aren’t immune to the corporate governance
troubles that often plague the family businesses that still dominate
India’s economy.
In
a surprise ruling, an appeals court said Tata’s erstwhile
successor, Cyrus Mistry, was improperly ousted as chairman of the
group’s holding company three years ago, paving the way for his
reinstatement. In a further blow to the elderly tycoon, the court
found the group’s move to take the holding company private after
Mistry’s removal was unlawful and must be reversed.
The
Tata group can appeal the ruling to India’s Supreme Court. But the
turmoil couldn’t have hit at a worse time for a $110 billion
conglomerate whose products range from salt to software.
It
comes just as the group contends with a crisis at its British unit,
Jaguar Land Rover Automotive Plc—one of the crown jewels of Ratan
Tata’s buying spree—and a crushing economic slowdown at home
that’s dampened demand for wares from steel to Tetley teas.
“It
is a battle for honor and prestige,” said Shriram Subramanian,
founder of proxy advisory firm InGovern Research Services Pvt. Ltd.
“This ruling is a vindication of the position taken by Cyrus Mistry
that his removal was illegal.”
No comments:
Post a Comment