The Tata Group yesterday rebutted claims by ousted chairman Cyrus Mistry that he was reduced to a "lame duck chairman" following a bitter tussle in India's largest conglomerate.
"There is a multitude of records to show that the allegations made by Mr Cyrus Mistry are unwarranted and these records will be duly disclosed before appropriate forums, if and when necessary," said Tata Sons, the group's holding company.
"The Tata Sons board gives its chairman complete autonomy to manage opportunities and challenges. However, the tenure of the former chairman was marked by repeated departures from the culture and ethos of the group," the statement added.
The statement came after a boardroom struggle that has now become public, with Mr Mistry accusing Mr Ratan Tata, 78, scion of the founding family, of interference in company matters and inability to shut down loss-making ventures.
Mr Tata has returned as interim chairman, four years since he stepped down after two decades at the helm of one of India's oldest and most respected business houses in a much-feted generational change at the time. His succession plan has unravelled and the salt-to-software conglomerate's reputation is on the line following the abrupt dismissal of Mr Mistry, his 48-year-old successor.
In a five-page e-mail to the board of directors at Tata Sons, Mr Mistry claimed he had little say in many matters, such as the tie-up between Tata Sons and Singapore Airlines to start domestic airline Vistara, and another venture with AirAsia.
EXCERPTS FROM MR MISTRY'S E-MAIL TO BOARD
LACK OF CORPORATE GOVERNANCE
I am writing this letter to the board to emphasise the total lack of corporate governance and to point out the failure on the part of the directors to discharge the fiduciary duty owed to stakeholders of Tata Sons and of the group of companies.
To "replace" your Chairman without so much as a word of explanation and without affording him an opportunity of defending himself in a summary manner must be unique in the annals of corporate history.
HARM TO REPUTATION
The suddenness of the action, and the lack of explanation, has led to all manner of speculation and has done my reputation and the reputation of the Tata Group immeasurable harm.
DRIVEN BY EMOTIONAL REASONS
...As there is no line of sight to profitability for the Nano (car), any turnaround strategy for the company requires to shut it down. Emotional reasons alone have kept us away from this crucial decision.
A few months later (after a deal with AirAsia), I was surprised to be confronted with a similar situation requiring me to execute a fait accompli JV (joint venture) with Singapore Airlines. Without the benefit of time and experience to fully evaluate the proposal, I had to accept that Tata Sons would take a 51 per cent stake in a US$100 million (S$140 million) joint venture.
I cannot believe that I was removed on grounds of non-performance.
"Being pushed into the position of a 'lame duck' chairman, my desire was to create an institutional framework for effective future governance of the group," wrote Mr Mistry. He claimed that the company was looking at a writedown of around US$18 billion (S$25.1 billion) on five businesses.
The Tata Group is a 148-year-old business house with more than 100 operating companies in India and abroad. It has interests in consumer goods, aviation, wristwatches, cars, steel, software outsourcing, telecommunications and hotels.
The fallout has dominated headlines in India, where companies rarely air their dirty linen in public.
From one side, there are claims that Mr Mistry, who brought in more than 100 people at different levels over the last four years, had come up repeatedly against the old guard. They maintained that tensions had been simmering particularly over the last one year in part due to disagreements over business strategy.
Among Mr Tata's pet projects was the Tata Nano project to develop the world's cheapest car at 100,000 rupees (S$2,100) to make vehicles affordable for millions of Indians. The Nano did not do well in a country where people did not want to be seen in a car branded as the world's cheapest. Mr Mistry was in favour of shutting down the Nano project.
Meanwhile, Tata family trusts have reached out to sovereign wealth funds and other long-term investors to gauge their interest in purchasing the Mistry family's stake of 18 per cent if it became available, Bloomberg reported yesterday, quoting people with knowledge of the matter.
And the group is considering Tata Consultancy Services chief executive N. Chandrasekaran and Jaguar Land Rover head Ralf Speth as it seeks to find a successor to Mr Mistry, people familiar with the matter told Bloomberg yesterday.