“Beggars cannot be choosers” some great man said. However, the unfortunate aspect is that investors who choose to invest in stocks are being short-changed and treated as “beggars” by some managements.
Fortunately, the shareholders are not taking this shoddy treatment lying down and are instead rallying to combat the injustice.
We saw a few days ago how the shareholders of Tata Consultancy Service (TCS) revolted and protested vehemently at the fact that N. Chandrashekaran, the CEO, had demanded a handsome salary even though the shareholders are living a hand-to-mouth existence owing to the poor performance of the stock on the bourses.
We also saw the inspiring story of how the petty shareholders of Ricoh India have rallied under the dynamic leadership of Kalpraj Dharmashi, the veteran value investor, to bring the unscrupulous management of the company to book.
Now, it is the turn of Billionaire Cyrus Mistry, the Chairman of Tata Motors, to face the heat and get an earful from the beleaguered shareholders of the Company.
Cyrus Mistry has carefully cultivated the image that he is an “aam aadmi” at heart despite the billions under his belt. One endearing image is of his sitting cross-legged on a charpoy in a Dhaba and heartily tucking into local delicacies with his driver for company.
— Phani Mahto (@Phani_Mahto) May 16, 2016
However, some of the sheen came off when Cyrus Mistry announced to a packed audience of loyal shareholders of Tata Motors that the Company would pay a princely dividend of 20 paisa for FY 2015-16.
There was pin-drop silence for a few moments as the distinguished audience was too shell-shocked to react.
When the shareholders came to their wits, they gave Cyrus Mistry a piece of their mind.
“This dividend is nothing. Even beggars these days don’t accept anything less than a rupee” an octogenarian shareholder wept.
Another geriatric shareholder lamented that the Company could afford to pay tens of crore to star footballer Lionel Messi to be the brand ambassador but could only spare loose change for the shareholders.
At this stage, Cyrus Mistry gave a glimpse of his brilliant tactical thinking ability. He knew that if he adopted a belligerent stance, he would alienate the shareholders and they could rough him up. So, he instead adopted a conciliatory tone and empathized with them.
“I am pained for not being able to give the rightful dividend. My personal belief is that it’s a bad day for the company. I feel extremely unfortunate this day. Let me tell you it does not give me any pleasure to deny your rightful dividend. I know that many of you depend a lot on the dividend,” Mistry said in a soothing tone.
Then, in a deft manoeuvre, the wily Billionaire turned the tables around and made it appear as if the shareholders had to be grateful for the little that they got.
“The company is going through extremely challenging times, facing intense competition and a changing regulatory regime” Mistry said with a chill in his tone.
He also gave shareholders an ultimatum that they have to learn to be patient and not clamour for dividends:
“The journey is going to be long and not going to be there for the faint-hearted. So ladies and gentlemen, if you want to be shareholders of this company, don’t expect something which is going to be instant gratification, expect to be there on a long-term journey, expect to stand by this company, because this company will perform, but it will not turn around absolutely tomorrow”.
Cyrus Mistry’s brilliant tactic of firm diplomacy checkmated and mollified the shareholders. They shuffled out of the AGM feeling grateful that they have at least received a dividend of 20 paisa despite all the trials and tribulations that their Company is going through!