Mistry hits out, says he never got a free hand

Breaking his silence after his unceremonious ouster from Tata Sons, a combative Cyrus Mistry has said he was being turned into a ‘lame-duck’ chairman.

In an email to directors of Tata Sons and marked to the heads of Tata family trusts, Mistry writes: “....Being pushed into the position of a ‘lame-duck’ chairman, my desire was to create an institutional framework for effective future governance of the group.”

In the circumstances, he says, he had to be true to himself and “the best interests of the organisation”. The 48-year-old Mistry shot off the mail on Tuesday evening, a day after he was sacked. A day earlier, his predecessor Ratan Tata returned from retirement to take his place.

Mistry’s mail says: “While I would be lying if I said I am not disappointed, I have a sense of pride and dignity intact in the efforts I have taken to professionalise and institutionalise, regardless of the outcome of (the) effort I now witness.”

The mail also warns of a potential reduction in the value of Tata Sons assets to the extent of Rs 1.18 lakh crore.

“On the performance of the portfolio, as you are aware from my presentations to you in the recent past, if we look at the aggregate data between 2011 and 2015 and limit the analysis largely to the legacy hotspots (IHCL, Tata Motors PV, Tata Steel Europe, Tata Power Mundra and Teleservices), it will show that the capital employed in those companies has risen from Rs 1,32,000 crore to Rs 1,96,000 crore (due to operational losses, interest and capex).

“This figure is close to the net worth of the group which is at Rs 1,74,000 crore. A realistic assessment of the fair value these businesses could potentially result in a write down over time of about Rs 1,18,000 crore,” Mistry says. The mail rues Mistry got little support from the bosses at Tata Sons.

It says he was not allowed freedom as promised when he took over from Ratan Tata, and the board and trustees did not appreciate the problems he had inherited.

“Prior to my appointment, I was assured that I would be given a free hand. The previous chairman was to step back and be available for advice and guidance as and when needed. After my appointment, the Articles of Association were modified, changing the rules of engagement between the Trusts, the board of Tata Sons, the chairman and the operating companies. Inappropriate interpretation indeed followed, and it severely constrained the ability of the group to engineer the necessary turnaround,” Mistry states. The mail also speaks about turbulence in overseas businesses.

“The foreign acquisition strategy, with the exceptions of JLR and Tetley, had left a large debt overhang. The European steel business faced potential impairments in excess of $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 lease for Pierre in New York are such that it would make it a challenge to exit. Tata Chemicals still needs tough decisions about its UK and Kenya operations,” he states.