Wadia raises concerns over Tata Chemicals' overseas investment

Continued investments by Tata Chemicals in under-performing overseas business incurring substantial losses, specially in the UK, have led to destruction of shareholder value with net debt of the firm rising to Rs 8,695 crore in the last 10 years, according to Nusli Wadia.
Facing a shareholders' vote on December 23 after Tata Sons moved a resolution to remove him as an independent director of Tata Chemicals, Wadia also said the series of allegations against him were "totally false and baseless".
"I had raised my serious concerns over the years for providing continuing financial resources of the company towards the overseas business and assets, which were continuously under performing and incurring substantial losses," he wrote in a letter to the shareholders of the company.

Highlighting the 2005 acquisition of Brunner Mond Group, he said, "I as well as some other board members expressed serious apprehensions on the proposal for the acquisition of Brunner Mond Group, having soda ash business operations in UK, Kenya (Magadi Soda) and the Netherlands at a cost of around Rs 800 crore for sound reasons."
However, decision was ultimately taken by consensus, he added.
"Unfortunately shortly after the acquisition the profitability became negative and continued to remain so... This has now led to an impairment on this acquisition of approximately Rs 1,600 crore," Wadia wrote.

The company is currently looking to extricate itself from substantial part of its UK business, including the pension fund issues, which it has inherited from the acquisition.

"The investment and their costs have led to the destruction of shareholder value of your company," he said while seeking their support against the move by Tata Sons to oust him as an Independent director, which he has been for the past 35 years.
Highlighting flaws in the inorganic expansion approach of the company, Wadia said: "During the last ten years mainly due to various acquisitions, the consolidated debt of your company went up from Rs 1,827 crore to Rs 8,695 crore, an increase of Rs 6,800 crore."
This included the funding required for other joint ventures and subsidiaries. The total impairment of all the various investments made is approximately Rs 2,000 crore, he added.

Reacting to a series of allegations made by Tata Sons against him, Wadia said: "...That I am acting against the interests of Tata Chemicals is totally false and baseless. I have served as an Independent director of Tata Chemicals for the past 35 years as also Chairman of the Nomination and Remuneration Committee where at the Annual General Meeting I am answerable to shareholders."
Wadia also claimed that the statement issued by the Independent directors of Tata Chemicals on November 10, "affirming confidence in the Board, Chairman and the management in the conduct of the company's business was a unanimous statement".

Stressing that he had carried out his duty as an Independent Director, Wadia also said he "differed strongly" with Ratan Tata in the merger of then Hindustan Lever Chemicals Ltd (HLCL) and Tata Chemicals in 2003.
Taking a dig at the cross holdings of Tata Chemicals in various Tata group listed and unlisted firms, Wadia claimed the approximate value of the unlisted shares is around Rs 7,200 crore or more.
"The current value of the listed shares is in excess of around Rs 1,300 crore making a total of around Rs 8,500 crore. If these holdings were to be disposed off, your company would be debt free. These cross holdings are being maintained in a debt ridden company only to indirectly keep the voting rights and control in Tata Sons," Wadia said.