Ratan Tata, the interim Chairman of Tata Sons, has reached out to sovereign wealth funds to buy out the stake owned by the family of ousted Chairman Cyrus Mistry. Mistry's family's Shapoorji Pallonji Group, a construction major, owns almost a fifth of Tata Sons.
The family trusts wants to ensure that if Mistry's family later decides to sell its stake in the Tata Group holding company, the new investor will be a friendly party that shares their long-term vision, according to the people.
Mistry, who had been Tata's chairman for nearly four years, was abruptly removed from his role on Monday for non-performance without the opportunity to defend himself, the executive wrote in an e-mail on Tuesday to the board of Tata Sons Ltd, the holding company, a copy of which was obtained by Bloomberg.
Mistry, recently spent almost six hours in the Bombay House, the Tata Headquarter in Mumbai and also chaired the TBGL board meeting. Some of the other Tata stocks that finished in the green included Tata Teleservices, Tata Coffee and Tata Communications.
Shapoorji Pallonji, the largest shareholder, owns about 18.4 per cent stake in Tata Sons.
Mistry raised "ethical concerns" in Tata group's aviation joint venture with AirAsia and alleged that a forensic investigation revealed fraudulent transactions of Rs 220 million (around US$3.9 million) involving non-existent entities in India and Singapore.
CEO at Jaguar Land Rover, Ralf Speth, is among those being considered to take up the role of chairman at Tata Group.
Tata Power Company and TCS, however, ended in the red, down 1.38 per cent and 0.58 per cent respectively. Bothra nonetheless says that if such a deal can be worked out, it would be a good move as that will end the uncertainty surrounding the group. They said they were "studying the circumstances" of the removal.
A terse statement from Tata Sons said Cyrus Mistry had been replaced with Ratan Tata, who had in 2012 stepped down after he turned 75 years old, a retirement age that Tata himself set up and adhered to.
Besides, Tata Motors' stocks also receded by 1.44 per cent to Rs 521.85, while the scrip of Tata Power fell by 1.36 per cent to Rs 79.55.
"Nobody would have thought such things could happen at Tata", said J. N. Gupta, a former executive at India's markets regulator and now managing director at Stakeholders Empowerment Services.
"The only board member to reply was Vijay Singh, a nominee director of Tata Trusts on the Tata Sons board, who appreciated the plan". However, the tenure of the former chairman was marked by repeated departures from the culture and ethos of the group, it added.