Cyrus Mistry states Tata Sons could see $18 billion in writedowns

Mistry, in his letter, mentions specific ventures under the Tata Group as "legacy hotspots" of the company. 

Published: 26th October 2016 05:02 PM  |   Last Updated: 26th October 2016 06:21 PM   |  A+A-

Cyrus Mistry (File photo | Reuters)

Cyrus Mistry (File photo | Reuters)

By PTI

MUMBAI: Former Tata Sons chairman Cyrus Mistry has levelled a series of allegations against
Ratan Tata and contended that he was pushed in to a position of "lame duck" chairman, and changes in decision making process created alternate power centres in the Tata Group.

In an explosive confidential email to Tata Sons board members, Mistry accused them of replacing him as chairman of India's largest conglomerate of without so much as a word of explanation and without affording him an opportunity to defend himself "in a summary manner", that it must be unique in the annals of corporate history.

"I was shocked beyond words at the happenings at the board meeting of October 24, 2016. Apart from the invalidity and illegality of the business that was conducted, I have to say that the Board of Directors has not covered itself with glory," the mail stated.

"To 'replace' your Chairman without so much as a word of explanation and without affording him an opportunity of defending himself, in a summary manner must be unique in the annals of corporate history," he wrote in the email on October 25 which was circulated widely in the media today.

Attempts to get a response from Tata Sons on Mistry's charges failed.

Mistry said he was promised a free hand when he was appointed Chairman in December 2012 but Articles of Association were modified, changing the rules of engagement between the Tata family Trusts and the Board of Tata Sons.

Stating that he inherited problems, he went on to raise corporate governance issues alleging representatives of family trusts, which hold two-thirds of Tata Sons shares, were reduced to "mere postmen" as they left board meetings midway to "obtain instructions from Mr. Tata."

In clear signs that not all was well between him and Tata, he highlighted his predecessor's loss-making Nano car project that consistently lost money but could not be shut down for "emotional reasons" and because it would have stopped the supply of Nano gliders to an electric car making entity where Tata had a stake.

He alleged that it was Tata who forced the Group to foray into the aviation sector by making him a 'fait accompli' to joining hands with Air Asia and Singapore Airlines and making capital infusion higher than initial commitment.

Also, "ethical concerns" had been raised over certain transactions and a "recent forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore," he wrote.

He warned that the salt-to-software giant may face Rs1.18 lakh crore in writedowns because of five unprofitable businesses he inherited.

Defending his record, Mistry said he inherited a debt-laden enterprise saddled with losses and went on to single out Indian Hotels Co, passenger-vehicle operations of Tata Motors,

European operations of Tata Steel and part of the group's power unit and its telecommunications subsidiary as "legacy hotspots."

He said the suddenness of the action, and the lack of explanation has led to all manner of speculation and has done immeasurable harm to his reputation as well as that of Tata Group.

"I cannot believe that I was removed on grounds of non- performance," he said going on to point to two directors, who voted for his removal, only recently lauding and commending his performance.

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