Mistry hits back, says Tata Sons 'misleading' shareholders

Rebutting allegations of Tata Sons of rise in expenses during his tenure as "misleading", ousted chairman Cyrus Mistry today hit back saying networth of the holding company has actually risen and pointed out high costs relating to office and corporate jets used by Ratan Tata and his PR set.
Mistry's office in a statement said one of the reasons for a rise in expenses under his tenure was because Tata Sons was bearing some costs on behalf of the Tata Trusts, its biggest shareholder.
Impairments and writedowns were due to legacy issues, largely relating to Tata Teleservices Ltd, it said.

Mistry, the statement said, did not approach any of the Tata Group business with the intention of doing a "quick cleansing so that he could immediately demonstrate decent results going forward."
Stating that some of the other investments of Tata Sons were of "questionable nature", the statement referred to Rs 400 crore investment in Nagarjuna refineries and a joint venture with Sasol Ltd for converting coal into liquid fuel.
Tata Sons, the holding company of the USD 103 billion Tata Group, had as one of the reasons for ousting Mistry cited expenses (other than interests on debt) on staff rising from Rs 84 crore to Rs 180 crore during his four-year tenure.

It also cited increase in other expenses from Rs 220 crore in 2012-13 to Rs 290 in 2015 (excluding exceptional expenses) and rise in impairment provisions from Rs 220 crore in 2012-13 Rs 2,400 crore in 2015-16 indicating inability to stem falling values and turned around the 'hot spots' referred to by Mistry.

"The Tata Sons full-page newspaper advertisement on November 11 vaguely accused that expenses and impairments increased at Tata Sons during Cyrus Mistry's Chairmanship. Insinuating the increase in expenses as a failure of Mr Mistry is another brazen attempt to mislead the public and shareholders," the statement said.

It said "significant" costs were incurred for corporate jets used by Ratan Tata, Mistry's predecessor who was brought back after Mistry was abruptly dismissed.
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.

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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.
"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.