The decision of the independent directors at Indian Hotels (IHCL) to wholeheartedly back Cyrus Mistry came as a shock for the Tata camp

MUMBAI: The decision of the independent directors at Indian Hotels (IHCL) to wholeheartedly back Cyrus Mistry came as a shock for the Tata camp. As the impact sunk in, there was growing acceptance at Tata Sons that they needed a more proactive strategy to convince independent directors, investors, and the public at large to back them in their boardroom battles.

The Tata brand, valued at $13.7 billion by the UK-based Brand Finance in July, has for decades stood for trust and reliability. Tata insiders fear the current uncertainty over leadership is going to rob the brand of some of its sheen, in addition to eroding the market cap of group companies.

The holding company is becoming aware of the need to build a more convincing narrative for change in leadership among independent directors and other stakeholders, with whom Mistry seems to enjoy support. On Friday, all six independent directors on the IHCL board backed Mistry for his leadership and strategic acumen.

As the board meeting was on, the IHCL stock rallied nearly 3% to close at Rs 112.

Since October 24, the day Mistry was forced out of Tata Sons board, observers see some amount of reluctance within the company to elaborate on the sequence of events and reasons leading to the sudden change in leadership at the helm of Tata Sons.

“It was terrible management on the part of Tatas, especially when we knew half the IHCL board were Mistry sympathisers,” said a Tata insider on condition of anonymity. “We somewhere didn’t realise that there is a Mistry-appointed CEO who would present a compelling case for the ousted chairman,” the source added. In 2014, Mistry had brought in veteran hotelier Rakesh Sarna as its MD & CEO to run IHCL.

Now the Tata camp is planning to go on a communication overdrive to build a strong case in favour of their decision to sack Mistry as Tata Sons chief. Tatas are connecting with old hands at communications, corporate affairs and brands who have served the group well.

There will be an immediate stock-taking of the likely support Mistry might enjoy in the boards of other group companies. “We know this is going to be a long-drawn battle, and it would probably take up to three years to get Mistry out of all the boards,” said a source.

 Bureau Report