In an explosive confidential email to Tata Sons board members, Cyrus Mistry has levelled a series of allegations against Chairman Ratan Tata and contended that he was pushed into a position of “lame duck” chairman before being sacked unceremoniously.
“I was shocked beyond words at the happenings at the board meeting of October 24, 2016. Apart from the invalidity and illegality of the business that was conducted, I have to say that the Board of Directors has not covered itself with glory. To ‘replace’ your Chairman without so much as a word of explanation and without affording him an opportunity of defending himself, in a summary manner must be unique in the annals of corporate history,” he wrote in the email.
He asserted that the sudden removal and the lack of explanation has led to a lot of speculation and has done
immeasurable harm to his reputation as well as that of Tata Group.
“I cannot believe that I was removed on grounds of non-performance,” he said going on to point to two directors, who voted for his removal, only recently lauding and commending his performance.
Stating that he inherited problems, he went on to raise corporate governance issues alleging representatives of family trusts, which hold two-thirds of Tata Sons shares, were reduced to “mere postmen” as they left board meetings midway to “obtain instructions from Mr. Tata.”
He also hit out at Tata for running a loss making Nano car project for emotional reasons. “The Nano product has consistently lost money, peaking at Rs 1,000 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 has a stake,” he wrote in the mail.
He 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 Air Asia and Singapore Airlines and making capital infusion higher than initial commitment.
He also hinted at “ethical concerns” that 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.
He warned that the company may face Rs 1.18 lakh crore in writedowns because of five unprofitable businesses he inherited.
Defending his tenure as the Chairman, 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.”