Listed Tata Group companies have lost a combined R26,472 crore in market capitalisation in the past three sessions after Tata Sons Board removed Cyrus Mistry as chairman on Monday.
On Tuesday, the Tata group’s stocks lost R10,843 crore. The cut was bigger on Wednesday when they lost R12,604 crore. On Tuesday, Mistry had written a letter to the board warning the group that it may have to write-down about two-thirds of its net worth due to its unprofitable businesses.
“On the performance of the portfolio, as you are aware from my presentations to you in the recent past, if we look at the aggregate data between 2011 and 2015 and limit the analysis largely to the legacy hotspots (IHCL, Tata Motos PV, Tata Steel Europe, Tata Power Mundra, and Tele services), 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),” he wrote.
“This figure is close to the networth of the group which is at R1,74,000 crore. A realistic assessment of the fair value these businesses could potentially result in a writedown of about R118,000 crore over time,” Mistry added.
Mistry pointed out that 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.
Leading the pack was Tata Metaliks which lost 13% and ended Thursday’s session at R367.55. Both Tata Global Beverages and Indian Hotels lost more than 10% in the past three sessions. The other listed companies of the group lost anywhere between 0.6 to 8.5% over the past three days.
TCS’s gain had offset the free fall of Tata group stocks. In Thursday’s session, Tata Group stocks only lost R3,024 crore.