Cyrus Mistry was open to TCS stake sale

MUMBAI: Cyrus Mistry, the ousted chairman of Tata Sons, had multiple times discussed with Tata Trusts that the group should sell 5% stake in TCS, people in the know told the ET, and this runs counter to allegations that Mistry may have turned down proposals by members of the controlling Tata Trusts to sell the stake.

"The matter was considered thrice in the Tata Sons board meetings but no action was taken due to a divided house," a person close to the development told ET. While some board members were in favour of the stake sale to lessen the group's debt burden and channel some investments into new ventures, some members didn't support the sale, he added.

The lack of consensus was the main reason the matter was postponement to the future meetings. In a June 2015 board meeting when Mistry shared a 10-year vision document 'Tata Strategy 2025' with the board members, it was clearly mentioned in the strategy blue print that 5%of TCS stake will be sold within next five years. The vision documents were revised subsequently after inputs from various directors to accommodate differing views but the stake stale option was always part of Mistry's plan.

An email questionnaire sent to TCS and Tata Group spokespersons did not elicit any response.

The stake sale stalemate at the board level is one of key reasons that led to "trust deficit" between Mistry and the Tata Trustees — and finally his unceremonious exit. The Tata Trusts, Sir Dorabji Tata Trust, Sir Ratan Tata Trust and JRD Tata Trust own 28%, 24% and 4% of Tata Sons, respectively. Combined Tata Sons and other trusts like Jamsetji Tata Trust and Navajbai Ratan Tata Trust hold nearly 74% stake in TCS, worth Rs 3.32 lakh crore based on IT company's stock price on Tuesday.

TCS contributes disproportionately to holding company Tata Sons revenues. On March 2016, dividend from the IT firm accounted for more than 90% of Tata Sons' revenues due to dwindling profits from other Tata companies. Mistry, owns 0.21% (41,63,526 shares) of the company.

Though Tata insiders have been quoted in media reports as saying that Mistry was relying too heavily on TCS for growth, a person close to Mistry denied this citing the strategy documents that shows each company's clear path in terms of growth, capital requirements, and even contribution to Tata Trusts.

Most companies like Tata Steel, Tata Motors PV, IHCL and Tata Teleservices have been seen slower growth and TCS has been the cash cow for the group.