Ousted chairman Cyrus Mistry today rebutted Tata Sons’ contention of expenses having risen under his four-year rule, calling it a “brazen attempt to mislead” public and shareholders and said “significant” costs were incurred for corporate jets used by Ratan Tata.
Among the explanations, Mistry says that Tata Sons was bearing entire office costs for Ratan Tata, the chairman emeritus, and a “significant amount” of this was for the use of corporate jets.
Mistry said the replacement of controversial lobbyist Nira Radia’s Vaishnavi Communications with Arun Nanda’s Rediffussion Edelman just prior to his taking over also resulted in a jump in costs from Rs 40 crore to Rs 60 crore.
“She (Radia) had been replaced by Arun Nanda (Rediffusion Edelman) who had been brought in by Ratan Tata at a cost of Rs 60 crore per year for PR support just prior to Mistry taking charge,” his office said in the statement.
It added that part of the public relations infrastructure paid for by Tata Sons was also provided to Ratan Tata-headed Tata Trusts. In a 9-page statement issued last week, Tata Sons had said staff costs had risen to Rs 180 crore in 2015-16 from just Rs 84 crore in 2012-13. The other expenses increased from Rs 220 crore in 2012-13 to Rs 290 crore last fiscal, it had said.
Mistry also said there had been “fundamental changes” in compensation to the leadership in the last five years of Ratan Tata’s chairmanship. The November 10 statement from Tata Sons had also said that there had been a huge jump in the impairments to Rs 2,400 crore in FY16, which Mistry today blamed on “legacy issues”.
“The impairments and write downs at Tata Sons were due to legacy issues, largely relating to TTSL (Tata Teleservices),” the statement said. “Mistry did not approach any of the businesses with a view to do a quick cleansing so that he could immediately demonstrate decent results going forward,” the statement released today said.
Mistry singled out one investment in Piaggio Aero, promoted by one of Ratan Tata’s friends, as a “distressing” case in this context as Tata Sons had to exit at a commercial loss of Rs 1,150 crore.
Cyrus Mistry’s New Revelations: Radia was paid Rs 40 cr per year. Listen in. pic.twitter.com/OQqM3b9Y8w
— ET NOW (@ETNOWlive) November 15, 2016
“This was after the efforts of Bharat Vasani and Farokh Subedar who managed to recover Rs 1,500 crore, overcoming the objections of Mr. Ratan Tata who in contrast favoured increasing investments in that company. Today, the company is, for all practical purposes, nearly bankrupt,” it said. Mistry said despite the writedowns, Tata Sons’ networth grew to Rs 42,000 crore from Rs 26,000 crore between 2010-11 and 2014-15, which strengthened its ability to absorb future shocks.
This is the second rebuttal from Mistry on the accusations levelled in the 9-page statement by Tata Sons on November 10. The first one dealt with issues of independent directors and attempts to drift away from the group.