Concerns expressed by me have become a reality: Cyrus Mistry to Supreme Court2 min read . Updated: 14 Jun 2020, 10:59 PM IST
Cyrus Mistry estimated Tala Teleservices’ loss to be around ₹60,000 cr, and questioned the existence of Tata Nano’s Guj plant
Former Tata Sons chairman Cyrus Mistry has questioned the Tata group’s continued investments in what he said were several unprofitable businesses, including the Nano small car project and Tata Steel’s European operations.
Mistry is fighting a court battle against Tata Sons over his ouster and is seeking proportional board representation as the largest shareholder in the holding company of the group. He made the allegations in a fresh affidavit filed in the Supreme Court where the matter is being heard.
Mistry’s allegations have previously been made in lower courts, but could have a bearing on the final outcome of an acrimonious battle.
In the affidavit filed on Friday in the Supreme Court, Mistry said concerns he had first expressed more than three and a half years ago over “value-destructive acquisitions" made by his predecessor Ratan Tata—and who replaced him temporarily—have become a reality. He said he inherited these acquisitions.
In October 2016, after Mistry’s removal, he wrote a letter to the board highlighting certain investments made by his predecessor. This letter has been the core of exchange between the two sides.
Mistry estimated the loss to Tala Teleservices Ltd to be in the vicinity of ₹60,000 crore, questioned the continued existence of the Tata Nano plant in Gujarat despite not producing a single car since 2017, objected to continued investments in Tata Steel Europe, which had losses of $495 million as of 2019, and highlighted the risk of “considerable future impairments" in the Mundra power project.
On Tata Power’s Mundra project, aggressively pursued by Ratan Tata, Mistry said that despite ₹18,000 crore being put into the project it was yet to show a turnaround. “Tata Power has made a further provision of ₹3,550 crore and the managing director of the company has recently confirmed in the public domain that even after tariff revision, the project would continue to bleed," he said.
The Tata Nano project, which had accumulated losses of ₹6,000 crore as of Q1 FY17, has still not been shut. Mistry said a decision to shut down the Nano plant, taken before his removal, is yet to be implemented for “emotional reasons", despite minimal production and demand, inflicting huge losses on shareholders.
On Tata Steel Europe (the erstwhile Corus), he said that only a part of the impairment has been recognized. Corus was acquired for $12 billion in 2007 and despite additional investments over the years the cumulative losses to date have been approximately $1.5 billion. As of 2019 the UK steel works had shown a loss of £381 million or $495 million, said Mistry.