The bitter tussle between the Tatas and ousted chairman Cyrus Mistry came to fore at the annual general meeting of Tata Sons, as the two sides traded allegations and counter-allegations over the management of $110 billion salt-to-software group.
While no official statement or record of the proceedings was released on the first-ever online AGM of Tata Sons held on Thursday, sources said representatives of the Mistry family firms, the single biggest shareholder, flagged concerns over the drop in performance and mounting debt of two major group companies — Tata Steel and Tata Motors.
Besides, the representatives of the Mistry family, which holds 18.5% stake in Tata Sons, also questioned recent investment decisions taken at Tata Sons, which, according to them, have gone into funding losses.
However, Tata Sons chairman N. Chandrasekaran refuted the allegations of the family, saying he was clearing the “mess [that] was created in 2013-16”, the period during which Mr. Mistry was the chairman of the group. He also asserted that Tata Sons’ investments in operating companies were done to correct the capital structure of group firms and prevent the default of any liabilities by them. At the AGM, which was also attended by Tata group Chairman Emeritus Ratan Tata, the Mistry family representatives raised issues of mounting losses and borrowings at Tata Motors and Tata Steel. They also flagged concerns regarding auditors’ remarks on Tata Steel Europe and AirAsia India “for their ability to continue as a going concern”.
According to the sources, Mr. Chandrasekaran responded by saying that in the past three years, a lot of effort had gone into the restructuring of Tata Steel, which witnessed the mix of profitable Indian operations increasing during the period. He also said the revival plans of Tata Steel and Tata Motors had been affected by the COVID-19 pandemic.
On the issue of losses in airline ventures, Mr. Chandrasekaran commented that the investment commitment was made in the past, and that “Tata Sons does not go back on its commitment”, while reiterating that an airline business takes longer to be profitable.
The Mistry family representatives had asked whether a proper analysis was done by the Tata Sons board prior to funding these ventures — AirAsia India and Vistara. They also highlighted AirAsia India’s current liabilities exceeding its current assets by ₹1,200 crore and that its net worth had been fully eroded. They asked if Tatas were to buy out the JV partners, whether that would not be merely buying the liabilities of the budget carrier, the sources added.
Tata Sons’ board had sacked Mr. Mistry as chairman on October 24, 2016.
