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Home » business » Ousted chairman Cyrus Mistry hits out at Tata top brass, questions several projects

Ousted chairman Cyrus Mistry hits out at Tata top brass, questions several projects

By Newsd
Updated on :
New Delhi: **FILE** File photo of Cyrus Mistry whom Tata Sons on Monday removed as its Chairman, nearly four years after he took over the reins of the group. PTI Photo (STORY DEL66) (PTI10_24_2016_000175A)
A day after the Tata Sons board dismissed Cyrus Mistry as chairman, he hit back with a vengeance at the board in general and his predecessor and interim replacement Ratan Tata in particular.
In the letter, Mistry clearly detailed the failed strategies, questionable transactions and authoritarianism inside India’s largest conglomerate. The situation had now turned out into an ugly corporate war. Here are some excerpts from the letter.
 ● The Nano car project causes a loss of.  Rs. 1,000 crores.  Emotional reasons alone have kept Tata away from the crucial decision of shutting down the project. Another challenge in shutting down Nano is that it would stop the supply of the Nano gliders to an entity that makes electric cars and in which Mr. Tata has a stake..
● The foreign acquisition strategy, with the exceptions of  JLR and Tetley, had left a large debt overhang. The European steel business faced potential impairments in excess of USD 10 billion, only some of which has been taken as of date. Many foreign properties of IHCL and holdings in Orient Hotels have been sold at a loss.
● Tata Capital had a book that required significant clean up on account of bad loans to the infrastructure sector.
●  The telecom business has been continuously haemorrhaging. The cost to exit this business via fire sale or shut down would be USD 4-5 billion. This is in addition to any payout to DoCoMo of at least a billion plus dollars. The original structure of the DoCoMo transaction raises several questions about its appropriateness from a commercial or prudential perspective within the then prevailing Indian legal framework.
●Tata Power aggressively bid for the Mundra  project based on low-priced Indonesian coal. As regulations changed, the losses in 2013-14 alone amounted to Rs. 1,500 crores
●  Ethical concerns have been raised with respect to certain transactions related to Air Asia. A recent forensic investigation revealed fraudulent transactions of Rs. 22 crores involving non-existent parties in India and Singapore. Executive Trustee, Mr. Venkatraman, who is on the board of AirAsia  and also a shareholder in the company, considered these transactions as non-material and did not encourage further study.
●  During Cyrus’s term, the operating cash flows of the group have grown at 31% compounded per annum. The Tata Group valuation from 2013 to 2016 increased by 14.9% per annum in rupee terms as against the BSE Sensex annual increase of 10.4% over the same period
● Modification in Articles of Association resulted in creating alternative power centres without any accountability or formal responsibility. Invalidating the very governance role of nominated directors were reduced to mere postmen. As an example, once, the trust directors had to leave a Tata Sons board meeting in progress for almost an hour, keeping the rest of the Board waiting, in order to obtain instructions from Mr. Tata
Cyrus further accuses Tata of pushing him into a “lame duck chairman”. Replacing him as Chairman of India’s largest conglomerate without so much as a word of explanation is unique in the annals of corporate history.


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