Shares in Tata companies yesterday fell after the Indian giant’s ousted chairman Cyrus Mistry warned it could face US$18 billion in asset write-downs and accused directors of wrongfully dismissing him.
Tata Motors Ltd and Tata Power Co were down about 3 percent each in early trade on the Bombay Stock Exchange, while Tata Steel Ltd was nearly 2 percent lower after details of the e-mail to the holding company’s board emerged.
In the e-mail, Mistry said India’s largest conglomerate could face 1.18 trillion rupees (US$18 billion) in write-downs because of unprofitable businesses he inherited when he took over the job in 2012.
Mistry was the first head of the multinational from outside the Tata family and the group, founded under British colonial rule in 1868, hit headwinds during his time in charge with lackluster performances at several companies.
In his e-mail, Mistry cited the steel arm of the sprawling US$100 billion conglomerate, which is struggling to off-load its loss-making British assets, as well as its automanufacturing business which has long been plagued by weak sales.
He said the small, cheap Nano car spearheaded by the company’s leader of 21 years, Ratan Tata, 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 on Monday said it was replacing Mistry after four years, in a surprise announcement.
It said the 78-year-old Ratan Tata had been appointed interim chairman until a successor could be found.
Mistry, in his e-mail, said he was trying to turn things around at the group, but found himself in the position of a “lame duck chairman.”
“I cannot believe that I was removed on grounds of non-performance. I hope you do realize the predicament I found myself in. Being pushed to the position of a lame duck chairman, my desire was to create an institutional framework for effective future governance of the group,” he wrote.
Responding to Mistry’s claims yesterday, the conglomerate told the Bombay Stock Exchange its financial statements represented a “true and fair view” of the state of affairs.
Mistry succeeded Ratan Tata in December 2012 after being announced as its heir more than a year earlier. He is related to the famous Indian family through his sister’s marriage.
Tata Group’s revenue slipped 4.6 percent for the financial year ended March to about US$103 billion.
One of its worst performers is Tata Steel, which last month reported a quarterly net loss of about 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.
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