Cyrus Mistry focused more on Tata Group's debt: report
26 October 2016
Tata Group's investments in some unprofitable businesses could cost the group close to $18 billion in writedowns, reports citing an internal letter the ousted chairman Cyrus Mistry sent to the company's board as stating.
Mistry was unceremoniously ousted from the chairman's post on Monday by the Tata Sons board for reasons not officially made public by the group. Reports attribute Mistry's ouster to his falling out of favour with family patriarch Ratan Tata and the powerful trusts, which own two-thirds of the group.
Tata is said to have become increasingly frustrated by Mistry's focus on divestments.
Mistry in his letter, reported to have stated that the Indian Hotels Co, passenger-vehicle operations of Tata Motors Ltd, the loss-making European steel operations of Tata Steel, its telecom venture and a ultra mega western Indian power plant of Tata Power are "legacy hotspots" of the company.
"A realistic assessment of the fair value (of) these businesses could potentially result in a write down over time of about Rs118,000 crores ($18 billion)," Mistry is reported to have said in the email.
In the email, Mistry said that he faced constant interference by Ratan Tata, to the point that he was pushed into becoming a "lame duck".
Ratan Tata dramatically returned to the helm of the family business this week after Cyrus Mistry was ousted as the chairman of the Tata Group.
The abrupt sacking of Mistry on Monday, however was unprecedented in the history of the 148-year-old organization.
Tata Group's revenue slipped 4.6 per cent for the financial year ended March to about $103 billion.
Ratan Tata had led the company for 21 years during which the group's revenues had grown from around $6 billion to $100 billion as he made a string of big-ticket purchases.
The difference is while Tata bought businesses like JLR, Britain's Tetley Tea and Anglo-Dutch steel firm Corus, Mistry focused on reducing the group's $30 billion debt level by selling assets and refinancing loans.