Home / Companies / News /  Tata’s aviation venture among first signs of trouble in Cyrus Mistry tenure

New Delhi: Ousted Tata group chairman Cyrus Mistry has revealed that he did not want the conglomerate to enter aviation.

In his letter to the board, Mistry indicated that he had pushed hard not to enter the space with AirAsia India, but was overruled.

“Early in my tenure our foray into the aviation sector began when Mr. (Ratan) Tata ushered me into his office and handed me a report on AirAsia by Bain & Co. He had concluded negotiations to partner with AirAsia (Bhd) and wanted the proposal tabled at the forthcoming Tata Sons board meeting. My pushback was hard but futile," he said in the letter dated 25 October.

Mistry says he was only able to extract a promise that no debt be raised at the level of the joint venture and to limit Tata Sons investment in the airline, which was an arm of Malaysia’s AirAsia Bhd, to 30% of the $30 million equity.

Mistry also said that a study of the airline books had revealed fraudulent transactions of Rs22 crore.

A Tata Sons spokesman declined comment on the contents of the letter. AirAsia India CEO Amar Abrol did not offer any comments for the story.

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Earlier this year, the Tata group increased its stake in the airline to 49%, buying out Arun Bhatia. Air Asia Bhd continues to own 49%.

Mistry also does not seem to have been in favour of starting another airline in collaboration with Singapore Airlines.

“A few months later (after the AirAsia incident) I was surprised to be confronted with a similar situation requiring me to execute a fait accompli joint venture with Singapore Airlines. Without the benefit of time and experiences to fully evaluate the proposal, I had to accept that Tata Sons would take a 51% stake in a $100 million joint venture," he said.

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Mistry said both decisions were driven by Ratan Tata’s passion for aviation.

“The passion for the airlines sector has led Mr. Tata to continue his involvement with the strategy of the two airlines. It is on his advice that the Tata Sons board has increased the capital infusion in the sector at multiple levels of the initial commitment," he said.

The civil aviation ministry is set to submit an affidavit in Delhi high court on 11 November in the matter of grant of airline licence to AirAsia India and admit it was not aware of the details of the relationship the company had with its Malaysian parent.

Mint reported on 13 October that the Indian airline was effectively controlled by its Malaysian parent, in violation of Indian law.

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