I had no say in aviation foray: Mistry

In his letter, Mistry points out negotiations with both AirAsia and Singapore Airlines were carried out by Ratan Tata

Tata Sons tied up with AirAsia in February 2013 to start an airline and six months later joined hands with Singapore Airlines. Both the decisions occurred within a year of Cyrus Mistry taking over as group chairman, but now as Mistry's letter to Tata Sons' board members indicates he had little role in them.

TURBULENT TIMES

• Mistry says negotiations with both AirAsia and Singapore Airlines were carried out by Ratan Tata and he was presented with fait accompli
• Mistry wanted Tata Sons investment in AirAsia India capped at 30%
• Forensic probe revealed fraudulent transactions worth Rs 22 crore in AirAsia India

Mistry's letter also highlights Rs 22 crore fraud in AirAsia India adding that a first information report was filed only on the insistence of an independent director. AirAsia did not immediately respond to a query seeking a comment.

In his letter, Mistry points out negotiations with both AirAsia and Singapore Airlines (JV partners in AirAsia India and Vistara) were carried out by Ratan Tata and that he had been presented with a fait accompli.

Tata Sons is majority shareholder in both the airlines.

“The passion for the airlines sector has led Mr Tata  to continue his involvement with the strategy of the two airlines. It is on his advice that Tata Sons board has increased the capital infusion in the sector at multiple levels of the initial commitment,” Mistry said.

Ratan Tata's interest and involvement in the airline business was  clearly evident as in 2013, Tata led AirAsia and Singapore Airlines bosses to meetings with the then Civil Aviation Minister Ajit Singh seeking approvals. Again in early February he also spoke out against the controversial '5/20' rule, which scuttled the overseas expansion plans of two airlines.

In July 2013, Ratan Tata was appointed as an advisor to the AirAsia India board.

According to Mistry, early in his tenure as chairperson Tata handed him a report on AirAsia and wanted him to table the proposal for the joint venture airline as he (Tata) had concluded the negotiations. “My pushback was hard but futile. However I was able to extract a promise of the debt to be raised at the level of JV as well as limiting Tata Sons investment to 30 per cent of the $30 million equity,” Mistry said.

While initially Tata Sons took 30 per cent stake in AirAsia India, the group along with its exectutives subsequently raised it to 51 per cent last year purchasing the stake held by their third partner Arun Bhatia's Telestra Tradeplace.

Mistry writes within months of the AirAsia deal he had to take up the proposal of 51 per cent stake in joint venture airline with Singapore Airlines “without the benefit of time and experience to fully evaluate the proposal”.

Mistry's letter also raises serious concern about the management of AirAsia India. “A recent forensic investigation revealed fraudulent transactions of Rs 22 crore involving non existent parties in India and Singapore. Executive trustee Mr Venkataraman, who is on the board of AirAsia and also a shareholder in the company considered these transactions as non material and did not encourage further study. It was only at the insistence of the independent directors,one of whom immediately submitted his resignation, that the board decided to belatedly file a first information report,” Mistry said.