Zee Media Bureau
New Delhi: For the first time since his ouster as the chairman of Tata Sons, Cyrus Mistry broke his silence on Tuesday in a long letter/mail to the directors of the company where in he termed his sacking as shocking and illegal.
In a move that stunned the corporate world, Board of Tata Sons on Monday removed Cyrus Mistry as the chairman of the company while appointing Emeritus Chairman Ratan Tata as interim chief for four months.
While the only reason given was that it was done keeping in mind the "long-term interest" of the company, Mistry termed it illegal and wrote a letter/mail to the directors of the Tata Sons.
Here are 10 key points of Cyrus Mistry's letter:
- Cyrus stated that he was “shocked beyond words at the happenings” and termed his removal as a business of “invalidity and illegality”.
- He contended that he was pushed in to a position of "lame duck" chairman and changes in decision making process created alternate power centres in Tata Group.
- Mistry said he was promised a free hand when he 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.
- 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."
- Mistry highlighted Nano car project 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.
- 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. Mistry also wrote about fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore.
- Mistry also warned that the salt-to-software giant may face Rs 1.18 lakh crore in writedowns because of five unprofitable businesses he inherited namely 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.
- Mistry also wrote in his letter that the foreign acquisition strategy with the exceptions of JLR and Tetley, had left a large debt overhang. "The European steel business has potential impairments in excess of USD 10 billion, only some of which has been taken as of date. Many foreign properties of IHCL and holdings in Orient Hotels have been sold at a loss. The onerous terms of the lease for Pierre in New York are such that it would make it a challenge to exit," he said.
- Mistry said he took "tough decisions" in the face of the challenges and said that he did so "with sensitive care to the group's reputation as well as containing panic amidst internal and external stakeholders..."