Tata Sons hits out at Mistry; accuses him of betraying trust
Launching a scathing attack on ousted chairman Cyrus Mistry, Tata Sons today accused him of betraying trust and trying to seek control of main operating firms of the over USD 100 billion group.
In a nine-page statement, the promoter of the major operating Tata companies made a point by point rebuttal to the letter which Mistry had written to its board members a day after he was ousted on October 24.
Tata Sons accused Mistry of trying to gain control of the Indian Hotels Co Ltd - the firm that runs Taj Group of Hotels - by using independent directors.
Mistry-headed IHCL, where Tata Sons holds just 28.01 per cent stake, had last week in a filing to stock exchanges stated that independent directors have backed the Chairman and his leadership.
"In hindsight, the trust reposed by Tata Sons in Mr Mistry by appointing him as the Chairman four years ago has been betrayed by his desire to seek to control main operating companies of the Tata group to the exclusion of Tata Sons and other Tata representatives," the Tata Sons statement said.
Tata Sons said dividend from 40-odd Tata Group firms had declined during Mistry's tenure while expenses have risen. It accused Mistry of demolishing the historic management structure where Tata Sons exercised control over its group companies.
"We now have an unacceptable new structure where the Chairman alone is the only common Director across several companies and this situation could not be allowed to go on," it said.
Punching holes into Mistry's performance over four years, it listed Tata Steel Europe, DoCoMo-Tata Tele joint venture and Tata Motors' Indian operations as "problem companies" where there was no "noticeable improvement in operations" and the situation has worsened with widening losses, increasing debt and declining market share.
"Even with no turn-around...the only action taken was to write-off huge amounts against these companies," it said.
Mistry had in his letter to the Directors warned of Tata Group firms facing Rs 1.18 lakh crore write-offs.
Tata Sons said the group's debt has risen by Rs 69,877 crore to Rs 2,25,740 crore in the last four years and went on to point that the buyer of Tata's European steel assets had dramatically turned around the company in the very first year.
It lashed out at Mistry's handling of the crisis at Tata Steel Europe and the stand-off with Japan's DoCoMo over the failed telecom joint venture where Tatas face USD 1.17 billion penalty for violation of contract.