The full-blown war between the Tatas and Cyrus Mistry is expected to escalate in intensity, with the latter evidently unwilling to step down as Chairman of various group companies, including Tata Motors, Tata Steel, TCS and Tata Power.

“Mistry has been asked to step down, but he has shown no inclination to do so,” said a company source close to the Tata Group. Mistry, the source added, “even chaired a board meeting of Tata Global Beverages at Bombay House last week. At a time when he has questioned his dismissal as Chairman of Tata Sons, it is unlikely that he will exit from group companies.”

If the leadership uncertainty is allowed to fester, it may start impacting group companies despite the Tatas’ attempts to signal that it’s business as usual.

“It’s a tricky situation for the CEOs,” said a top executive in a Tata group company.

“On the one hand, Mistry says he is still the Chairman of the group companies; on the other, Ratan Tata has taken over as Interim Chairman of Tata Sons. The two power centres at the group level, mentioned by Mistry in his letter to the Tata Sons’ board, seem to have percolated to the group companies.”

Mistry is Chairman of Tata Steel, Tata Motors, TCS, The Indian Hotels Company Ltd, Tata Global Beverages, Tata Chemicals, Tata Industries and Tata Teleservices. According to insiders, if Mistry contests his ouster, his exit from the group companies, too, would get entangled in the legal process. In that case, each company may have to call for an EGM to force him out.

Mediation talks

According to sources close to the Tatas, there is talk of mediation between Ratan Tata and Mistry to explore how the latter could be eased out without any further escalation.

However, sources close to the Mistry camp do not see much coming of this.

“If Mistry agrees to step down from the group companies, what does he gain? Already, the Tatas have issued statements ruining his reputation,” said the source.

The war of words between the Tatas and Mistry was amped up last week. While Mistry blamed Ratan Tata for interfering in his running of the company and charged him with taking “flawed” decisions, the Tatas accused Mistry of being malicious.

More exits

The spat is beginning to percolate down the chain of command within the Tata group. Three senior group executives at Tata Sons have resigned. This includes human resources chief NS Rajan, group business development and public affairs head Madhu Kannan and group strategy executive Nirmalya Kumar. All three were part of Mistry’s Group Executive Council.

Meanwhile, the allegations made by Mistry relating to corporate governance issues and insider trading are being scrutinised by the stock exchanges and market regulator SEBI.

The Enforcement Directorate may also examine allegations of fraudulent transactions worth ₹22 crore in Air Asia.

To add to the Tatas’ woes, partners and entities associated with some of the troubled Tata group companies are asking for clarity on business matters.

Japanese major NTT DoCoMo, which is in a legal battle over the Tatas’ telecom venture, wants to know if the new dispensation under Ratan Tata will change the group’s stance over payment of the $1.17-billion arbitration award.

Similarly, trade unions in the UK have sought clarity on Tata Steel’s proposals related to their pension scheme.

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