Shocked beyond words, says Cyrus Mistry on unceremonious ouster
In an email to the Tata Son’s group, Cyrus Mistry, former chairman of Tata Group has emailed the board stating that he was ‘shocked beyond words’ by his unceremonious removal from the company.
“I have to say the Board of Directors has not covered itself with glory. To replace the Chairman without so much as a word of explanation and without affording him an opportunity to defend himself must be unique in the annals of corporate history”, Business Standard in a report quoted Mistry.
Mistry, in the letter, said, "On the performance of the portfolio, as you are aware from my presentations to you in the recent past, if we look at the aggregate data between 2011 and 2015 and limit the analysis largely to the legacy hotspots (Indian Hotels, Tata Motors PV, Tata Steel Europe, Tata Power Mundra and Teleservices), it will show that the capital employed in those companies has risen from Rs 1,32,000 crore to Rs 1,96,000 crore (due to operational losses, interest and capex). This figure is close to the net worth of the group which is at Rs 1,74,000 crore. A realistic assessment of the fair value these businesses could potentially result in a write down over time of about Rs 1,18,000 crore".
Mistry said that Tatas have made him "lame duck" Chairman.
In the letter, Mistry talked about the situation and the debt of Tata's subsidiaries when he took over as Chairman. He wrote about how Tata Power, Tata Teleservices, Tata Motors especially Nano car, Tata Steel, Indian Hotels were performing and the "hard" decisions he had to make.
Like, speaking about the challenging situation arose in Tata Motors, both on the commercial and passenger vehicles, Mistry said, "Before 2013, in order to shore up sales and market share, Tata Motors Finance extended credit with lax risk assessment. As a result, the NPAs mounted to being in excess of Rs 4,000 crore. Beyond this, Nano product development concept called for a car below Rs 1 lakh, but the costs were always above this. This product has consistently lost money, peaking at Rs 1000 crore. As there is no line of sight to profitability for the Nano, any turnaround strategy for the company requires to shut it down. Emotional reasons alone have kept us away from this crucial decision. 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 (Ratan Tata) has a stake."
In the board meeting on Monday, Mistry’s removal did not feature as a separate item on the agenda but rather in ‘other items,’ to discuss, the BS report added.
Mistry was been replaced by his predecessor, Ratan Tata on Monday who urged the group’s companies to focus on the market and enhance returns to investors.
Mistry on Tuesday, filed three caveats against Ratan Tata, Tata Sons, Sir Dorabji Trusts, while one caveat was filed by Cyrus Investments Pvt Ltd against Ratan Tata and Tata Sons.
“The sudden action and lack of explanation has led to all manner of speculation and has done my and the group’s reputation immeasurable harm,” Mistry said.
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