Mumbai: Industrialist Nusli Wadia, an independent director on the board of Tata Motors Ltd, has written to its shareholders, pointing out what he calls governance lapses at the auto maker.
Wadia is making a representation to shareholders after Tata Sons Ltd, promoters of Tata Motors, called an extraordinary general meeting (EGM) to oust him from the board.
Wadia pointed out that Tata Sons interim chairman Ratan Tata’s meeting with union leaders at Tata Motors’s Pune plant was inappropriate. He said a deal with the union for a productivity linked settlement, which was to be signed after 14 months of negotiation, has been put at risk.
“These actions on the part of Mr. Tata ‘by galvanizing’ the union and ‘acting prejudicially against the interest of your company may put the company and its future in great jeopardy and impact the overall morale of the workers, employees and management on Tata Motors’," wrote Wadia. “It is now a matter of conjecture whether his settlement will be signed or not."
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Wadia also alleged that Tata Sons tried to coerce independent directors through unsigned legal opinion.
“The opinions were sent to the board and independent directors just one hour before their meeting was to convene," wrote Wadia referring to the Tata Motors board meeting on 14 November. “The legal opinions...sought to intimidate and more specifically to influence the conduct of the independent directors."
He went on to say that one of the opinions stated that if independent directors were to support Mistry, this would not be considered “material" and “should not be disclosed to the stock exchanges". It also advised independent directors on the manner in which they should conduct themselves.
“This serious illegal and inappropriate act of corporate misgovernance is a contravention of law," said Wadia, adding that it contradicts the claims of Tata Sons and Ratan Tata on ethics, morality and governance.
“The opinions were...not in any way imposing pressure or coercion on the company secretary to deal with independent directors in a particular way. The contention that the company secretary was pressurised is therefore wholly misconceived and unwarranted," said a Tata Sons spokesperson in an emailed statement. It added that the fact that independent directors sent a release to the stock exchange “corroborates that there was no pressure on either the directors or the company secretary".
Wadia also said he differed with Tata on corporate matters, including the launch of the Nano.
Nano, a car conceived to sell at Rs1 lakh, “has proved to be a serious drain on financial resources of Tata Motors", said Wadia.
Even now, when it sells at Rs2.25 lakh, its sale is at a substantial loss to the company.
The car was made with a production plan for 2.25 lakh units and, in financial year 2016, sold about 20,000 units and is selling even far lesser now, said Wadia.
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He also said Tata Motors has cross-holdings in other Tata companies, which can be used to pare its debt to the tune of Rs8,800 crore, saving interest of Rs800 crore to become a more profitable company.
Wadia reiterated the claims he made in an earlier letter to the shareholders of Tata Steel.
He also wrote that he “believes" that Tata Sons and the trustees of Tata Trusts had 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.
This “could be regarded as violation of the Insider Trading Regulation (unpublished material and price sensitive information and knowledge)," wrote Wadia.
Shailaja Sharma contributed to this story.