The reasons behind the sudden removal of the Chairperson of the Tata Group, Cyrus Mistry are coming out to be clearer as the days pass by. A trustee of the Sir Dorabjee Tata Trust revealed that the Tata Sons and their 66 per cent shareholder, Tata Trust were not in perfect sync. Both these parties were in conflict with each other. As Tata Sons is a profit investment company and hence they wanted more part of the earnings, on the other hand, Tata Trusts is a charity based trust and therefore wanted the earning’s dividends in cash.
Now, the sources of these profit dividends are companies like, Tata Steels, Tata Motors and Tata power. Therefore, the trusts must have taken their grievances to Ratan Tata, who in turn mounted pressure on Cyrus Mistry to deliver. But Mistry couldn’t deliver because he was dependent on the operating companies for dividend, many of which were not doing well due to legacy issues and the world economic situation.
This created a pressure for the group of companies and they thereafter chose to take Cyrus Mistry off the hook. This is what can be drawn from V R Mehta revelation.
