Tata Group said it ousted Chairman Cyrus Mistry because of a growing “trust deficit” with the biggest shareholders of the tea-to-software giant after the former head accused directors of India’s largest conglomerate of wrongfully dismissing him.
Mistry, who had been Tata’s chairman for almost four years, was abruptly removed from his role on Monday for non-performance without the opportunity to defend himself, the executive wrote in an e-mail on Tuesday to the board of Tata Sons Ltd., the holding company, a copy of which was obtained by Bloomberg. Tata Trusts own about 66 percent of Tata Sons.
“The Directors of the Tata Sons board had repeatedly raised queries and concerns on certain business issues, and Trustees of the Tata Trusts were increasingly getting concerned with the growing trust deficit with Mr. Mistry, but these were not being addressed,” Tata Sons said in the statement. “It is unforgivable that Mr. Mistry has attempted to besmirch the image of the Group in the eyes of the employees.”
Mistry’s e-mail and Tata’s rebuttal helps shed light on the power struggle occurring at the $100 billion conglomerate in the run-up to Mistry’s ouster, which stunned India’s business community. Mistry had been pushing to transform Tata Group into a more prudent enterprise than the globetrotter that bought Jaguar Land Rover and steelmaker Corus Group Plc under Ratan Tata.
Defending his record, Mistry said he inherited a debt-laden enterprise saddled with losses and singled out Indian Hotels Co., Tata Motors Ltd.’s passenger-vehicle operations, Tata Steel Ltd.’s European business, as well as part of the group’s power unit and its telecommunications subsidiary as “legacy hotspots,” according to the e-mail. Despite plowing 1.96 trillion rupees — more than the net worth of the group — into those units, they still face challenges and realistically assessing their fair value could result in writing down about 1.18 trillion rupees over time, he wrote.
“It is only on his removal that allegations and misrepresentation of facts are being made about business decisions that the former chairman was party to for over a decade in different capacities,” Tata Sons said in the statement on Thursday. “The tenure of the former chairman was marked by repeated departures from the culture and ethos of the group.”
From the flop of the world’s cheapest car — the Nano — to an ultra-mega power plant that had regulations changed on it, Mistry said he was trying to turn things around at the group since taking on the chairmanship. But he faced constant interference by his predecessor, Ratan Tata, to the point that he was pushed into becoming a “lame duck” chairman, according to the e-mail. Tata Sons refuted the charge and said Mistry was ”fully empowered to lead the group and its companies” as the Executive Chairman.