Ousted Tata Group chairman Cyrus Mistry has accused directors at India’s largest conglomerate of wrongfully dismissing him.
He also warned that the group may face 1.18 trillion rupees (US$18 billion) in writedowns because of five unprofitable businesses he inherited, Bloomberg reports, citing an email he wrote on Tuesday to the board of the group’s holding company Tata Sons Ltd.
Mistry, who had been Tata’s chairman for almost four years, was abruptly fired from his job on Monday for non-performance. He said he was not given the opportunity to defend himself.
Defending his record, Mistry said he inherited a debt-laden enterprise saddled with losses and singled out Indian Hotels Co., Tata Motors Ltd.’s passenger-vehicle operations, Tata Steel Ltd.’s European business, as well as part of the group’s power unit and its telecommunications subsidiary as “legacy hotspots”, according to the email.
Despite plowing 1.96 trillion rupees – more than the net worth of the group – into those units, they still face challenges and realistically assessing their fair value could result in writing down about 1.18 trillion rupees over time, he wrote.
“The letter suggests that there are deeper corporate governance issues when it comes to the reporting and governance between” the various stakeholders including Tata Sons, the group’s founders and the operating companies, said Shriram Subramanian, founder of InGovern Research Services, a proxy advisory firm.
“It would be strange if decisions of operating companies were deferred to the whims of one individual.”
Shares of group companies extended declines in Mumbai, with Tata Steel, Tata Motors and Indian Hotels falling at least 4 percent, Bloomberg said.
The National Stock Exchange asked the companies to clarify on the writedowns and its impact on the firms, the report said.
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