After the recent sacking of Cyrus Mistry by the Tata Sons board from the post of Tata Group chairman, the war of words between Cyrus Mistry and Tata Group has escalated to greater heights.
Recently ousted group chairman Cyrus Mistry has come out in his defence by saying that he was rendered powerless as Tata Sons chairman, leaving him with minimal decision making powers at the helm of affairs to reverse major mistakes of the past and struggling to prevent Tata Group from sliding into even deeper waters. Mistry said he was forced to keep the Nano project going, pushed into investing in two aviation businesses despite the group's huge debt and even told to ignore fraud to the tune of Rs 22 crore.
Mistry accused them of replacing him as Chairman of India's largest conglomerate of without so much as a word of explanation and without affording him an opportunity of defending himself "in a summary manner" that must be unique in the annals of corporate history.
The five-page letter listed the worst problems as he sees them and delivered a stinging rebuke largely targeted at predecessor and successor Ratan Tata, besides reminding the recipients that the information it contained wasn't new to them.
Here are the major excerpts of his letter which he wrote to the Tata Sons board
# I was pushed in to a position of "lame duck" chairman and changes in decision making process created alternate power centres in Tata Group, said Cyrus Mistry.
# Mistry alleged that it was Tata who forced the Group to foray into the aviation sector by making him a 'fait accompli' to joining hands with AirAsia and Singapore Airlines and making capital infusion higher than initial commitment. Also, "ethical concerns" had been raised over certain transactions and a "recent forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore," he wrote.
# Mistry said he inherited a debt-laden enterprise saddled with losses and went on to single out Indian Hotels Co, passenger-vehicle operations of Tata Motors, European operations of Tata Steel and part of the group's power unit and its telecommunications subsidiary as "legacy hotspots."
# Mistry highlighted his predecessor's loss-making Nano car project that consistently lost money but could not be shut down for "emotional reasons" and because it would have stopped the supply of Nano gliders to an electric car making entity where Tata had stake.
# I was promised a free hand when I was appointed Chairman in December 2012 but Articles of Association were modified, changing the rules of engagement between the Tata family Trusts and the Board of Tata Sons, said Mistry.
Key Tata Group firms lost over Rs 10,000 crore for the second day on Wednesday, extending the total erosion in market capitalisation to more than Rs 21,000 crore following Cyrus Mistry's ouster as Tata Group chairman. These firms had lost about Rs 10,700 crore on Tuesday.
Leading stock exchanges BSE and NSE on Wednesday sought clarification from various listed companies of Tata Group about purported disclosure by the ousted chairman about USD 18-billion possible writedown at these firms. The exchanges have asked these companies, including Tata Motors, Tata Steel, Indian Hotels, Tata Teleservices and Tata Power, to provide full details about these issues.
The Securities and Exchange Board of India (Sebi) is also looking into the alleged disclosure made in the purported letter written by Mistry to Tata Sons' board members including about financial and other irregularities as also lapses on the corporate governance front, sources said.
In an explosive confidential email to Tata Sons board members, Mistry warned that the salt-to-software giant may face Rs 1.18 lakh crore in writedowns because of five unprofitable businesses he inherited.