Stock exchanges on which Tata companies are listed on Wednesday sought clarifications from each on reports of ousted Tata Sons chairman Cyrus Mistry speaking about the group facing $18 billion in writedowns.
In a letter to Tata Sons directors, Mistry said that “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 R1,32,000 crores to R1,96,000 crores (due to operational losses, interest and capex). This figure is close to the net worth of the group which is at R1,74,000 crores. A realistic assessment of the fair value these businesses could potentially result in a write down over time of about R118,000 crores.”
Mistry added, “As is public knowledge, 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.”