MUMBAI: India’s largest conglomerate Tata rejected ousted chairman Cyrus Mistry’s warnings of possible massive write-downs as “malicious” and “unsubstantiated” on Thursday, as acrimony over his sudden sacking erupted into the open.
In an e-mail to the board leaked late Wednesday, Mistry said Tata may face $18 billion in asset write-downs because of unprofitable companies he inherited and accused directors of wrongfully dismissing him.
The e-mail, which made frontpage headlines in India, sent shares in Tata companies falling on the Bombay Stock Exchange on Thursday after they suffered earlier drops on news of his abrupt dumping late Monday.
But the $100-billion giant hit back, saying Mistry’s four years as chairman from 2012 was marked by “repeated departures from the culture and ethos of the group.”
Tata, a sprawling group founded under British colonial rule in 1868 and with companies ranging from tea to steel, has long prided itself on its social and corporate responsibility.
In a strongly worded statement, the group also rejected Mistry’s claims of being a “lame-duck chairman” after he suggested in his e-mail that the board had been undermining him.
“As the Executive Chairman, he was fully empowered to lead the group and its companies,” the Tata statement said.
“It is a matter of deep regret that a communication marked confidential to Tata Sons board members has been made public in an unseemly and undignified manner,” the statement said, referring to Tata’s holding company.
“The correspondence makes unsubstantiated claims and malicious allegations.”
“It is unforgivable that Mr.Mistry has attempted to besmirch the image of the Group in the eyes of the employees.”
Mistry was the first head of the multinational from outside the Tata family, taking over from company patriarch Ratan Tata. The group hit headwinds during his time in charge with lacklustre performances at several companies.
Mistry had focused on reducing the sprawling group’s $30 billion debt level by selling assets and refinancing loans.
In his e-mail, a copy of which AFP has seen, Mistry cited the steel arm of the conglomerate, which is struggling to offload its loss-making British assets, as well as its carmaking business which has long been plagued by weak sales.
He said the small, cheap Nano car spearheaded by Ratan Tata, who led the company for 21 years, should be scrapped because it was unprofitable.
“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.”
Tata said on Monday it was replacing Mistry as chairman, with Ratan Tata appointed interim head until a successor could be found.
Ratan Tata is said to have become increasingly frustrated by 48-year-old Mistry’s focus on divestments, believing the group should hold on to its assets for the long term and not reduce its global reach.
During his time in charge, the 78-year-old Tata traveled the globe buying up big names including Britain’s Tetley Tea and Anglo-Dutch steel firm Corus.
Tata Group’s revenue slipped 4.6 percent for the financial year ended March to about $103 billion.
One of its worst performers is Tata Steel, which last month reported a quarterly net loss of almost 32 billion rupees, as it winds back its European operations.
The company announced earlier this year that it was selling its loss-making British assets owing to a global oversupply of steel, cheap Chinese imports into Europe, high costs and currency volatility.
Tata rejects dumped chairman’s warnings as malicious
Tata rejects dumped chairman’s warnings as malicious
