‘My Pushback Was Hard But Futile’ Says Cyrus Mistry On Tata’s Entry Into The Aviation Business
Cyrus Mistry blames Ratan Tata for the group’s aviation foray
Cyrus Mistry in his letter to the Tata Sons board, written 24 hours after he was unceremoniously sacked from the company's board, has detailed how despite his "pushback" he was not able to stop the Group from entering the aviation business.
The letter addressed to the eight Tata Sons board members and others including RK Krishna Kumar, Keki Dadiseth and Darius Khambata, was sent via email late evening on October 25.
The letter, a copy of which has been seen by BloombergQuint, says that early in his tenure Mistry was handed a report on AirAsia by Bain & Co. The report was handed to him by Ratan Tata, who had, according to the letter, concluded negotiations with AirAsia and wanted the proposal tabled at a forthcoming Tata Sons meeting. Mistry says in the letter that his "pushback was hard but futile". But that he was able to extract a promise of no debt to be raised at the joint venture level. And also that Tata Sons' investment would be limited to 30 percent of the $30 million equity.
Mistry then goes on to say that a few months later he was "surprised to be confronted with a similar situation requiring me to execute a fait accompli JV with Singapore Airlines". He claims in the letter that he had to accept that Tata Sons would take a 51 percent stake in a $100 million joint venture.
He refers to the aviation business as one in which Mr. Tata's involvement continues. And that it was on Tata's advice that further capital has been infused in the sector, at "multiple levels of the initial commitment".
It says "a recent forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore". Mistry says in the letter, Venkatraman, executive trustee and a member of the AirAsia board considered these transactions as "non-material and did not encourage further study". And that it was only after independent directors insisted that the board decided to file a first information report.
The letter by Mistry raises several other points about the financial issues faced by other group companies including Indian Hotels, Tata Capital, Tata Power and Tata Motors.
Both Tata Sons board and Tata Trusts refused to comment on the letter and its contents.
