Cyrus Mistry, Tata Sons' former chairman who was ousted by the company's board earlier this week, has defended his record in a strongly-worded letter to the company's board, stating he had inherited five unprofitable businesses," Bloomberg reported.
According to the Bloomberg report, which cited the letter, the conglomerate could stand to lose about $18 billion in write-downs should its assets be assessed based on fair value. Write-downs are typically carried out when the company's assets are overvalued compared to their market value.
Mistry also reportedly alleged that his turnaround efforts had faced constant meddling from his predecessor Ratan Tata and had been pushed into becoming a "lame duck" chairman. Tata Sons could not immediately be reached for comment.
Citing one of the struggling businesses, Mistry reportedly said Tata Motor's Nano's turnaround required shutting it down. "Emotional reasons alone have kept us away from this crucial decision." Many have speculated that differences over Mistery's approach to divesting business had irked Ratan Tata.
While the reasons behind Mistry's removal remain undisclosed, sources have told Reuters that Mistry had lost favor with family patriarch Ratan Tata and the powerful trusts that own about two-thirds of the Tata group. The trusts had also been granted special powers that allowed them to remove chairman, Mint reported.
Mistry has said in the letter that Indian Hotels Co, passenger-vehicle operations of Tata Motors Ltd, the loss-making European steel operations of Tata Steel, its telecom venture and a ultra mega western Indian power plant of Tata Power were "legacy hotspots" of the company.
Mistry has also said that he was "shocked" at the way he was removed, and wasn't given a chance to defend himself. Calling it an "unprecedented" step, he said the "board has not covered itself with glory."
According to earlier media reports that cited the company's trusts, the company's increasing financial struggles, decline in philanthropic activities, and the dispute with former telecom partner, NTT DoCoMo, and divestments of the company's UK steel business, had led to Mistry's removal.
With Reuters inputsSuggest a correction