BackTata trustees had a role in Welspun deal structuring, emails show
The office of Tata Trusts trustee Noshir Soonawala exchanged multiple emails with Cyrus Mistry on Tata Power's Welspun deal
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Mumbai: Tata Trusts trustees were involved in discussing the structure of the announced acquisition of Welspun Renewables Energy Pvt. Ltd by Tata Power Co. Ltd, according to email records reviewed by Mint.
These records were part of the supporting documents submitted by Tata Sons Ltd’s ousted chairman Cyrus P. Mistry in his representation to shareholders ahead of extraordinary general meetings (EGMs) of Tata companies called to remove him from their boards.
In July, the office of Noshir Soonawala, a trustee of the Tata Trusts, exchanged at least three emails with Cyrus Mistry with reference to the Welspun acquisition’s proposed and revised structure. In one email, Soonawala conveyed that he met with Nimesh Kampani of JM Financial Ltd to understand the proposed structure of the acquisition.
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Tata Power had announced on 12 June that it would acquire Welspun in a Rs9,249 crore deal and completed the acquisition in September. JM Financial had acted as the exclusive transaction adviser to Tata Power on the deal.
“This is a huge concern. There is no locus standi for Mr. Soonawala or Mr. Ratan Tata because they are not on the board of Tata Sons. They are a part of the Trusts, which is not even a shareholder of Tata Power, so from that perspective, one can question whether they violated the law (by seeking information on Welspun deal)," said Shriram Subramanian, founder and managing director at proxy advisory firm InGovern Research Services Pvt. Ltd. He added that Tata group companies need to define clearer structures in the way they carry their business.
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In an email sent on 5 July to Cyrus Mistry and marking Ratan Tata, Soonawala’s office wrote that following a meeting between them to discuss the renewable acquisition and a clearance from Tata Power’s chief executive Anil Sardana, he met with Nimesh (Kampani of JM Financial) to understand the “rationale for the proposed structure" of the acquisition. Soonawala wrote he had some views to discuss before the structure was finalized and that his views needed to be considered without “coming in the way of acquisition".
Kampani declined to comment on discussions and meeting with Soonawala. A Tata Power spokesperson didn’t respond to calls seeking comment.
In another email sent by Soonawala’s office on 22 July to Mistry, he wrote that it would be helpful to see JM’s revised proposal and indicated that Mistry might have to wait till “RNT" (Ratan Tata) returned to Mumbai on 29 July before proceeding. On 25 July, Soonawala’s office again wrote to Mistry saying Ratan Tata would meet him to discuss Tata Power’s power platform as well as the renewable acquisition soon after returning on 29 July.
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In a 27 July email, Mistry wrote to Soonawala and Tata that a meeting with JM on deal structure would be helpful.
“This is completely incorrect and is a selective disclosure of facts. At no stage or time have any of the trustees demanded information that in our view could be construed as interference or violation of any regulatory norms. More importantly, in every case, any such information or discussions that have been held are the specific behest of Mr. Mistry," a Tata Sons spokesperson said in an email response.
Soonawala’s discussions were held with JM Financial at Mistry’s specific request, the Tata Sons spokesperson said. “Post the formal announcement of the deal, when details of the deal were shared, in our view it was felt that the deal could be better structured so that it is beneficial to all the shareholders of Tata Power rather than the acquisition being in a multi layered step down subsidiary structure."
The response also added that Soonawala, a former vice chairman and finance director of Tata Sons, is widely regarded within the Tata Group for “his vision and his ability to come up with innovative financial solutions".
The ousted chairman has repeatedly talked about the excessive interference of the trusts. In his shareholder missive, Mistry had accused Ratan Tata and Soonawala of taking the veto rights of the trust-nominated directors as their entitlement to dictate to these directors how Tata Sons should conduct itself.
Last week, industrialist Nusli Wadia wrote in a representation to shareholders of Tata Steel Ltd that he “believes" that Tata, Soonawala and the board of Tata Sons sought access to information and documents of Tata Steel, Tata Motors and other Tata firms, and also demanded that they be briefed by senior management of these firms.
Tata Sons is seeking to remove Wadia as independent director from boards of Tata Chemicals Ltd, Tata Steel and Tata Motors Ltd through a series of EGMs this month. Tata Sons has also sought to remove Mistry as director from boards of six listed Tata companies. Shareholders have already voted him off the TCS board and Tata Industries Ltd and Tata Teleservices Ltd, both unlisted.
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