Some of Tata's investments questionable: Mistry

Mistry said the impairments and write-downs at Tata Sons were not only because of legacy issues but that there were other investments of questionable nature such as Nagarjuna Refineries and Sasol JV

Cyrus Mistry, the ousted chairman of Tata Sons, on Tuesday continued to spill the beans in his second rebuttal to the accusations levelled against him in the nine-page statement by Tata Sons on November 10.

Mistry said the impairments and write-downs at Tata Sons were not only because of legacy issues, largely relating to Tata Teleservices. There were other investments of questionable nature, such as Nagarjuna Refineries and Sasol JV. The statement issued by Mistry’s office on Tuesday said, “One investment in Piaggio Aero, a company in the aerospace sector with a friend of Tata, was especially distressing.” Tata Sons had to exit at a commercial loss of Rs 1,150 crore, the statement said.

“This was after the efforts of Bharat Vasani and Farokh Subedar who managed to recover 

Rs 1,500 crore, overcoming the objections of Tata who in contrast favoured increasing investments in that company. Today, the company is, for all practical purposes, nearly bankrupt,” went the statement.

The statement specifically responded to the allegations of rising expenses and impairment losses. The first statement rebutting the November 10 statement of Tata Sons dealt with issues of independent directors and attempts to drift away from the group. The statement added there were other investments of “questionable nature” such as Nagarjuna Refineries (Rs 400 crore) and Sasol JV.

The Tata Sons statement on November 10 had alleged that impairment provisions increased from •200 crore in 2012-13 to •2,400 crore in 2015-16, indicating inability to stem falling values and turn around the ‘hot spots’ referred to by Mistry. It had also said the group had written down, written off or made provisions for impairments worth thousands of crores of rupees during the past three years.

Mistry’s statement said that between FY11 and FY15, Tata Sons’ net worth, after considering impairments, increased from Rs 26,000 crore to Rs 42,000 crore, significantly strengthening the ability to absorb future shocks. On the allegations regarding rising expenses under Mistry’s four-year rule, the statement called it a “brazen attempt to mislead” the public and shareholders.

Among the explanations, Mistry said Tata Sons was bearing the entire office cost for Ratan Tata, the chairman emeritus, and a “significant amount” of this was for the use of corporate jets. Mistry also said the replacement of controversial lobbyist Niira 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 a year to Rs 60 crore a year. 

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 nine-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. It said the group executive council members didn’t take any commission from group companies and drew remuneration only from Tata Sons. Mistry said in the five years preceding 2012, several group centre members held what were deemed “non-executive” roles in Tata Sons, and that several erstwhile directors of Tata Sons drew additional commissions from operating group companies.

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