Deposed chief backs his record and states group faces $18 billion in write-downs
The ex-Tata Group Chairman Cyrus Mistry challenged directors at India’s largest conglomerate for wrongfully removing him. He also predicted the conglomerate might suffer $18 billion in write-down because of five unprofitable businesses that he inherited.
Mistry, who had led Tata as its chairman for nearly four years, was abruptly dismissed from his position on Monday due to nonperformance without availing him the chance to defend himself, communicated in an e-mail on Tuesday to the board of group’s operating company Tata Sons Ltd., a copy of which was collected by Bloomberg.
Defending his tenure, Mistry stated he inherited a debt-laden enterprise saddled with losses. He particularly singled out Indian Hotels Co., Tata Motors Ltd.’s and Tata Steel Ltd.’s European business, as well as a portion of the group’s power unit and its telecommunications subsidiary as “legacy hotspots,” according to the e-mail.
Despite investing some ₹1.96 trillion, which is larger than the net worth of the group, into those units, they nevertheless suffer difficulties and according to him, realistically evaluating their fair value could end up in write-downs approximately ₹1.18 trillion over time.
Shares of group companies continued to decline in Mumbai, with Tata Steel dropping as much as 5.9 percent and Tata Motors tumbling as much as 5.5 percent.
Spokespeople for Tata Sons and Mistry refused to comment about the email.
From the debacle of the world’s cheapest car, Nano, to an ultra-mega power plant which had regulations amended on it, Mistry stated he was working to shift things around at the group since becoming the chairman. However, he suffered continual interference from his predecessor, Ratan Tata, to the situation where he was shifted into becoming a “lame duck” chairman, as per the e-mail.
As an example, Mistry indicated that the Nano, produced by Ratan Tata after he witnessed a family of four on a scooter on a rainy evening, should be abandoned as the project was unprofitable and at its height lost ₹10 billion.
“As there is no line of sight to profitability for the Nano, any turnaround strategy for the company requires to shut it down,” Mistry wrote.
“Emotional reasons alone have kept us away from this crucial decision.”
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