Remove tags to get more women in workforce, says Tata Sons Chairman

Tags need to be removed to get more women into India's workforce, Tata Sons Chairman, N Chandrasekaran said.

There are lots of 'tags' in India such as 'women cannot do this (kind of jobs); this is only for men,' and all of them have to be removed, he said. "There is a possibility of creating platforms for SMEs, there is a possibility of getting (more) women into workforce," Chandrasekaran said.

Policy changes are also needed.

In healthcare for example, rules are strict, he noted, pointing to "what can be done by doctors and what can be done by people who are not doctors."

Chandrasekaran also said that 'care' in general -- such as those targeted at elderly and children as an industry is a "huge opportunity." "We got to create women role-models in non-traditional areas," he said, questioning as to why they can be confined to only educated women.

Chandrasekaran made the comments here last evening while responding to a related question after the launch the book "Bridgital Nation" authored by him and Roopa Purushothaman, Chief Economist and Head of Policy Advocacy Tata Sons.

The launch was followed by a conversation with Nandan Nilekani, Co-Founder & Chairman Infosys and Founding Chairman, UIDAI (Aadhaar). Referring to India's education system, Chandrasekaran said it has always been about 'reading, writing and counting.'

"Thinking, collaboration, digital, using software are far more easier to teach than reading, writing and counting," he opined.

"Everybody need not get into higher education.

NCLAT won't change its judgment in Tata Sons case; will clarify RoC's role

The National Company Law Appellate Tribunal said on Friday that it would not change its judgment in the Tata Sons matter but it will however, clarify that Mumbai Registrar of Companies was only following the order of NCLT in conversion of the company from public to private entity.

The RoC counsel told the Tribunal the judgment was highly critical of the RoC and deems them to have done illegal acts whereas they were merely following orders of the NCLT while converting the company from public to private.

In the order dated December 18, the NCLAT had passed serious strictures against the RoC, stating that Tata Sons had hurriedly changed its status to a private company from public "with the help of the RoC", which was illegal. Justice Mukhopadhaya said, “The finding may be wrong but the judgment is not.”

The appellate tribunal has asked the RoC to furnish details on the paid-up capital requirement for a private company.

In its December 18 judgement, the NCLAT had said that the RoC, in the Certificate, had struck down the word ‘Public’ and shown ‘Tata Sons Limited' as a 'Private' company, even in the absence of any order passed by the Tribunal under Section 14 of the Companies Act, 2013.

In its petition, the RoC said there were some factual and legal errors in the judgment, and hence appealed to the appellate tribunal to amend the order so that it correctly reflected the conduct of the RoC, Mumbai, as not being illegal and acting in accordance with the provisions of the Companies Act 1956/2013.

Cyrus Mistry actions hurt Tata group interests, Tata Sons tells SC

In its petition to the Supreme Court, Tata Sons, the holding company of the Tata group, has said the Mistry camp had at no point sought any prayer regarding the quashing of the appointment of present Tata group chairman, N Chandrasekaran as the Executive Chairman of Tata Sons and yet, the NCLAT has declared Chandra's appointment as illegal. This NCLAT order, Tata Sons appeal says, needs to be reversed and set aside.

In its petition filed in the SC today, Tata Sons said the NCLAT order needs to be set aside in view of the fact that former Tata Sons chairman Cyrus Mistry actions as a Director of Tata Sons were causing grave threat to the integrity of Tata Sons Board apart from causing prejudice to Tata Sons interests. The SC will hear the petition next week.

Tata Sons said several action taken by Mistry after his removal from Tata group hurt its interests.

"This was clearly borne out from the extensive oral and written arguments rendered on behalf of Tata Sons before the NCLAT, pointing out that a purportedly confidential email addressed by Cyrus Mistry to Tata Sons Board of Directors was leaked, and confidential board minutes was put in public domain at the instance of Cyrus Mistry and he had unilaterally and in a wholly unauthorized manner corresponded with the income tax authorities (holding himself out to be a Principal Officer of Tata Sons) and submitted documents of Tata Sons to the income tax authorities. It was in view of these reckless and irresponsible acts that certain shareholders of Tata Sons had moved a requisition for the removal of Cyrus Mistry as the Director of Tata Sons," the petition said.

Tata Sons said soon after Mistry was removed as Tata Sons Chairman in October 2016, an email written by Mistry to Tata Sons directors was leaked to the media.

"Without getting into the controversy as to who was responsible for leaking the email, the fact of the matter is that the email made several unfounded, false and personal allegations against Tata Sons directors. Allegations with respect to the business of Tata Sons, as also of the operating companies, were also made in the said email. This email found widespread media coverage and resultantly led to a lot of concern and enquiry by various stakeholders of Tata companies, apart from creating sudden and unexplained volatility in the share prices of the listed Tata companies," the Tata petition said.

Stock exchanges and other regulators also sought details from Tata companies. "It was felt necessary to bring a quietus to the chaos created by Mistry’s email dated 25 October 2016. It is for this reason that Tata Sons was constrained to issue the press statement in order to quell the uncertainty and provide comfort and an assurance of stability to various stakeholders of Tata Sons and the Tata companies. Unfortunately, the NCLAT judgment construes the press statement in an entirely bizarre fashion, Tata Sons said. It relies on the press statement to show that the decision to replace Mistry had a ‘global effect’, without making it clear as to what this purported ‘global effect’ had to do with the legality of the decision to replace Mistry as the Executive Chairman, the petition said.

The NCLAT completely misconstrues the Tata press statement to hold that the fact that the statement was issued itself showed that the replacement of Mistry was not directorial in nature, Tata said. "Even mildly put, this is an extraordinarily unsustainable conclusion. There is no connection between issuance of th press statement by Tata Sons on 10 October 2016 and the legal issue of whether the grievance surrounding replacement of Mistry as Executive Chairman is in the nature of a directorial complaint or not. There is neither any legal nor factual connection between these two different aspects of the matter. Equally bizarre is the conclusion reached in the last line of paragraph that “The company and its Board also understood that such removal may lead to a sense of uncertainty of ‘Tata Sons Limited’ and ‘group companies’ and resulting in winding up”. It is truly perplexing as to how the Impugned Judgment concludes that the press statement displayed that the Appellant and its Board understood that the replacement of Executive Chairman would result in the winding up of Tata Sons, the Tata petition said.

The NCLAT judgment, the Tata group said, has been passed without appreciating the well settled position that no reasons are required to be given either by the board members or the shareholders for exercising their right to vote in any board meeting or general meeting, as the case may be."Hence, no reasons were required to be recorded for Mistry’s replacement or removal as Chairman or Director. At any rate, such reasons were not justiciable in the present proceedings," the petition said.

"The clear illegality in the NCLAT judgment is amplified by the fact that it orders restoration of Mistry to the position of the Executive Chairman of the Tata sons for the “rest of the tenure”. This relief had been specifically given up by Mistry companies before NCLT and, as also the NCLAT. The re-instatement is therefore, suprising, it said.

The Tata petition said a good review by the Nomination and Remuneration Committee of Tata Sons overlooks the fact that the NRC is not representative of the view of the entire Board, as it only consists of three Directors. "This is why the final decision of the NRC is subject to approval by the Board. The board only approved the change in the remuneration of Mistry in the ordinary course of business as per usual practice and did not make any comment on his performance as the Executive Chairman," the petition said.

"It is submitted that whether or not a person is fit to hold the position of an Executive Chairman is a matter to be decided by the Board in its collective commercial wisdom. The NCLT or the NCLAT, as the case may be, cannot sit in judgment over the wisdom of the Board of Directors and decide the suitability and fitness of a particular person to act as the Chairman. In the present case, since the Board had overwhelmingly (7 out of 9 Directors) decided to replace Mistry as the Executive Chairman, it was wholly illegal and beyond the jurisdiction of the NCLAT to reverse this decision and to seek to foist upon an unwilling Board, its former replaced Chairman, which cannot even otherwise be done as his tenure is already over. In other words, even assuming for the sake of argument that there was any infirmity in the process adopted by the Board to replace Mistry even that did not warrant a direction of reinstatement of Cyrus Mistry as the Executive Chairman of Tata Sons, the Tata group said.

The NCLAT Judgment attributes the so called loss in the Tata companies to the Trusts Nominated Directors (on the ground that they enjoy affirmative voting right) and casts blame on them for allowing the Tata Companies to function in a manner which caused loss. The order further holds that the impairment of confidence with reference to the conduct of Tata Sons was not attributable to probity qua Cyrus Mistry but to unfair abuse of powers on the part of others. The aforesaid findings and conclusions reached by NCLAT are plainly unsustainable and totally wrong. "The Trusts Nominated Directors were never in charge of the affairs of the Tata Companies. The Executive Management of the Appellant vested with Cyrus Mistry, who was also the Chairman of the Tata Companies. There is no material or evidence on record to suggest that Cyrus Mistry wanted to cut the losses in the Tata companies and the same was thwarted by the Trusts Nominated Directors by using the affirmative vote or otherwise. On the contrary, one of the biggest reasons for dissatisfaction with the performance of Cyrus Mistry as the Executive Chairman was that he had failed to take appropriate action with respect to the legacy issues and bring back on track the concerned Tata Companies. In this view of the matter, the conclusion that it is the Trusts Nominated Directors which are to be blamed for the functioning of the Tata Companies while absolving Cyrus Mistry of his responsibilities, is palpably erroneous, Tata Sons said.

The NCLAT order finds the replacement of Cyrus Mistry to have been effected “without following the normal procedure under Article 118”. However, it assigns no reason for this finding. It does not even notice the detailed arguments made orally, as also in writing, by Tata Sone before the NCLAT or even the reasons recorded in the Judgment of the NCLT stating that Article 118 only applied to the constitution of the Selection Committee for the purposes of appointment of a new Executive Chairman and such Selection Committee was not required to be constituted for the purpose of replacement of an Executive Chairman, the petition said.

The Tata group said in granting the relief purporting to restore Cyrus Mistry to the position of the Executive Chairman of Tata Sons, the NCLAT Judgment fails to consider the implications of issuing such directions which have no legal efficacy and yet which could be prejudicial to the interests of the concerned companies and their various stakeholders. The NCLAT failed to look at the issue of expiry of tenure – although it appears to have recognised that it lacked the jurisdiction to issue a direction extending tenures. "The Judgement also omits to consider the settled legal position that in case of tenure appointments, the appointment stands concluded upon completion of the respective tenure. In the present case, Cyrus Mistry’s tenure as Executive Chairman stood expired on 31.03.2017 and thus, the same cannot be restored.

Secondly, Tata Sons said the NCLAT failed to consider that any direction to restore a person to a post as sensitive as Executive Chairman should not be granted if it would lead to disharmony in the working of the company. "Given the hostility of Cyrus Mistry towards the Appellant (as reflected in the actions taken by and at the behest of Cyrus Mistry against Tata Sons and its stakeholders), the reinstatement of Cyrus Mistry as the Executive Chairman of Tata Sons would not be in the interest of the companies. Further, before issuing such a direction that NCLAT should have taken into account the fact that Chandrasekaran took over as Executive Chairman almost three years ago and is now firmly in the saddle and has accelerated part of growth with significant improvement in financial parameters of Tata Sons.

Tata group stronger, more resilient and future ready: Chandrasekaran

Tata Sons chairman N Chandrasekaran on Monday said uncertainties will persist in the new year but exuded confidence that the diversified conglomerate is better placed to take on challenges.

He said the salt-to-software USD 110-billion group is "stronger, more resilient and future ready" now and is moving "decisively" on financial fitness and operational efficiencies.

The comments from the group chairman, whose appointment was recently termed as illegal by the NCLAT on a petition by his predecessor Cyrus Mistry, comes at a time when growth has slowed to a six-year low domestically and there are clouds of uncertainties globally as well.

In an email to employees, Chandrasekaran said there is a steady improvement at the group level performance but also pointed out that there is more work to be done in case of some companies, which are facing headwinds due to the economic conditions.

"Macro uncertainties will persist in 2020, but they will also be accompanied by new opportunities across different businesses and markets," Chandrasekaran said.

Tatas plan to move SC vacation bench for early stay against NCLAT order

Tata Sons, the holding company of the salt-to-software conglomerate, is looking at approaching the vacation Bench of the Supreme Court for a stay against the National Company Law Appellate Tribunal (NCLAT) order to reverse the status of the company from private to public limited and reinstating Cyrus Mistry as a director on its board and on three group firms, a person close to the matter told Business Standard.

The NCLAT order on conversion of the company back to public limited and Mistry’s reinstatement as director on some boards was with immediate effect. Keen to get an early stay, the $110-billion Tata group may not like to wait till January 6, 2020, when the country’s top court reopens after the winter break. Tribunals such as the NCLAT have power to punish for contempt under Section 425 of the Companies Act 2013. However, for restoring Mistry as executive chairman of Tata Sons, the Tribunal has granted a four-week window.

The government too is getting active on the latest development in Corporate India. The Ministry of Corporate Affairs (MCA) will examine whether the procedures were followed by Tata Sons and the Mumbai Registrar of Companies (RoC) before the conversion of the company’s status from public to private limited under the leadership of N Chandrasekaran, a senior government official said.

“Implementation has to be after examination. The RoC is simply a registry with no decision making powers…We are going through the order and if we find any facts have been missed out in the order, we will place them before the Tribunal,” another official pointed out.

In theory, the RoC can make the change, after following certain procedures. But, lawyers argued that a reversal in the status of the company would be tough. In September 2017, Tata Sons had secured shareholders’ approval for conversion to a private limited company. At that time, such a conversion, under Section 14 of the Company Law, required approval of the Tribunal before approaching the RoC. The law was changed with effect from November 2, 2018, delegating the powers to the Central government. “The regional director office under MCA can now give this approval instead of the Tribunal,” one of the officials quoted above said.

Cyrus Pallonji Mistry’s counsel had stated that the decision for conversion was taken by the board of directors in a hurried manner with the “help of Registrar of Companies.” NCLAT called the decision of conversion illegal, directing RoC to reverse the conversion.

But, Mohit Saraf, a corporate lawyer, asked ‘’if majority shareholders have exercised their right to convert a public company into private company, how can one validly set aside such a conversion”. He said questioning the shareholders’ intent has no relevance under the Companies Act unless one is alleging fraud or other criminal action.

The legal opinion is indeed divided on this. For instance, some legal experts believe the RoC Mumbai will have to immediately change the status of Tata Sons from a private company to a public company without waiting for any board resolutions from Tata Sons.

“The RoC need not wait for any board resolutions or documentation/communication from Tata Sons. What Tata Sons did was illegal. As soon as the RoC gets the copy of NCLAT order, it will have to change the status into public limited company in its records,” said H P Ranina, a senior lawyer.

Conversion of Tata Sons into a private limited company is believed to have restricted the prospects of minority shareholders like the Mistry family (Shapoorji Pallonji) and others to sell their shares. Shapoorji Pallonji group holds around 18.5 per cent in Tata Sons, while Tata Trusts is the biggest shareholder with a 66 per cent stake.

A Tata Sons spokesperson did not respond to an email seeking their views on the road ahead. A Mistry spokesperson said the group had not received any communication from Tata Sons regarding the conversion into a private company.

$110 bn question: Who runs Tata Sons if SC backs tribunal on Cyrus Mistry

How do you unscramble an egg called Tata Sons? The second law of thermodynamics says orderly things gradually turn more chaotic, and there’s no going back, no separating yokes from whites.

But the appeals judge of India’s corporate law arbiter thinks he can reverse time. Or so it would appear from his order declaring that Cyrus Mistry, deposed three years ago as executive chairman of the holding company of India’s leading conglomerate, must be reinstated because ousting him was illegal.

Here’s the messy business in a nutshell: The closely held Tata Sons, which sits in control of the $111 billion global empire spread across more than 100 firms, is 66 per cent owned by Tata Trusts, charities run by Ratan Tata, the group patriarch. Mistry’s family owns an 18 per cent-plus stake in Tata Sons. That equity has its origin in an unpaid $200 million loan the Tata family took in 1925 to save its then-fledgling steel business. The core dispute is whether the holding company is a quasi-partnership between the Tata Group and the 154-year-old Shapoorji Pallonji, or SP Group, which is now run by Shapoor Mistry, the elder brother of Cyrus.

If it’s a partnership, then Mistry gets to argue that his minority rights were suppressed. If it isn’t, and he was just a professional CEO in a Tata enterprise, then the board was perhaps within its rights to fire him for nonperformance.

Justice Sudhansu Jyoti Mukhopadhyaya of India’s National Company Law Appellate Tribunal isn’t new to controversies. He’s the same judge who a few months back threatened to derail India’s bankruptcy law by giving unsecured operational creditors the same rights to recovery as secured financial lenders. The Supreme Court struck down that order. In Wednesday’s 172-page Tata-Mistry order, Mukhopadhyaya and Justice Bansi Lal Bhat decided that Tata Sons is indeed a partnership:

“We are of the view that for better protection of interest of all stakeholders as also safeguarding the interest of minority group, in future at the time of appointment of the Executive Chairman, Independent Director and Directors, the ‘Tata Group’ which is the majority group should consult the minority group i.e., ‘Shapoorji Pallonji Group’ and any person on whom both the groups have trust, be appointed as Executive Chairman or Director as the case may be...”

Crucial parts of the judgment have been put on hold pending appeals within a month. At this stage, it’s reasonable to expect that until India’s Supreme Court gives a final verdict, Chairman Emeritus Ratan Tata will retain control of the group, which is now administered by Natarajan Chandrasekaran, a non-controversial technocrat who replaced Mistry as chairman. However, none of the operating companies, such as Tata Motors Ltd., which owns Jaguar Land Rover, or Tata Steel Ltd., which acquired the former British Steel assets in 2007, will be able to make any strategic decisions. For at least four weeks, they’ll be frozen.

It will be a repeat of the uncertainty following the October 2016 boardroom coup against Mistry. Shortly after he was terminated, Mistry hit out at the group for allegedly compromising its finances to burnish the legacy of Ratan Tata, whom he had accused of backseat driving and oppressive interference. Mistry said he was given his walking papers for calling attention to the “legacy hot spots,” including the world’s cheapest car, which had flopped despite Ratan Tata’s strong backing for the project. The Tata Group, for its part, said it was disappointed with Mistry’s vision of the future. Even now, the finances are far from strong. The group has gross debts of 2.91 trillion rupees ($41 billion). If it weren’t for the cash-spewing software exports business of Tata Consultancy Services Ltd., the empire could come under strong pressure to deleverage quickly.

Given that the relations between the two men are probably beyond repair, would Mistry even want to return to work at Bombay House, as the headquarters are known? Perhaps not. However, he might want to retake his board seat, and the Mistry family would definitely want a reversal of what came after his dismissal: a change in the constitution of Tata Sons. The firm went from being a public limited company, albeit closely held, to an opaque private limited one. The appellate tribunal’s judgment has struck down that conversion, and also scrapped a never-used nuclear option in the charter that allows for Tata Sons’ board to transfer anyone’s shares by passing a special resolution.

To the extent that the Mistry family manages to get its chunky holding in Tata Sons to carry rights normally available to public shareholders, the value of that stake — at least in the eyes of creditors advancing money against it — gets closer to the $14 billion figure that Cyrus Mistry has used in the past as an estimate. His family’s main business is construction, building the Reserve Bank of India’s Mumbai headquarters as well as the Sultan of Oman’s palace. But India’s shadow banking crisis has left SP Group parched for liquidity. At this juncture, the ability to realize the full value of its stored wealth would help the Mistrys greatly.

At the end of the day, this dispute is all about time. Cyrus Mistry is 51 years old; in less than 10 days, Ratan Tata, who never married and has no children, will celebrate his 82nd birthday. If the final court verdict holds the core holding company to be a quasi-partnership with Mistry, the Tata name on the door may not survive him. That’s how high the stakes are.

Tata Sons stake in Tata Motors to rise to 43.73% post preferential issue

Tata Sons, the promoter of major operating companies of the Tata Group, will increase its shareholding in Tata Motors to 43.73 per cent after the proposed Rs 6,500 crore preferential issue by the automobile manufacturer.

Last week, Tata Mortors' board had approved raising of Rs 6,500 crore via preferential allotment of securities to Tata Sons.

In a notice for extraordinary general meeting (EGM) seeking shareholders' nod, Tata Motors said as on September 30, 2019 Tata Sons held 35.3 per cent stake in the company.

Explaining the reasons for raising funds from its promoters, Tata Motors said the domestic business has been hit by slowdown which "significantly impacted sales volumes, profitability and cash flows and increased the net debt to unsustainable levels".

Tata Motors group has a net debt of Rs 50,000 crore out of which Tata Motors Ltd alone account for Rs 20,000 crore.

"Though the company remains optimistic on medium to long-term growth in the Indian market, the near-term demand situation is fluid and the slowdown has come at an inopportune time when capital expenditure intensity will remain high due to continued focus on exciting products and BS VI transition," Tata Motors said.

Also, the company said its British arm Jaguar Land Rover continues to face risk from external factors despite improvement in performance and recovery in China.

"However, JLR continues to face risks from a slowing global economy, Brexit related uncertainties, trade wars and disruptions from ACES (autonomous connected electric shared)," Tata Motors said.

JLR will require continued investments in products and technologies to drive growth in this situation, it added.

"Hence despite improving business fundamentals, these external risks could impact the company's and JLR's credit ratings and ability to refinance competitively," Tata Motors said.

The company further said, "The preferential allotment to its promoter, at a premium to the current market price, was chosen to minimise dilution impact and for a successful and speedy execution".

As part of the fund raising plan, Tata Motors will issue up to 20,16,23,407 ordinary shares at a price of Rs 150 per share aggregating Rs 3,024.35 crore.

It will also issue up to 23.13 crore (23,13,33,871) convertible warrants each carrying a right to subscribe to one ordinary share per warrant, at a price of Rs 150 per warrant aggregating Rs 3,470 crore.

Tata Motors' board had also approved in principle raising of additional funds up to Rs 3,500 crore through external commercial borrowings.

The company said the EGM will be held on November 22 and the ordinary shares and warrants will be allotted to Tata Sons within a period of 15 days from the date of passing of this resolution, subject to regulatory approvals.