Mistry’s claims of ‘good performance’ are misconceived, says Tata Sons

Rajesh Kurup Mumbai | Updated on July 30, 2020

Ratan Tata, Chairman Emeritus, Tata Sons   -  K.V.S. GIRI

Upping the ante in the ongoing Tata-Mistry war, Tata Sons filed a rejoinder in the Supreme Court stating that ousted Chairman Cyrus Mistry’s claims of “good performance” are misconceived.

During Mistry’s tenure, the market performance of the Tata group’s operating companies, excluding Tata Consultancy Services and Tata Motors, was below Sensex returns, the rejoinder, a copy of which was reviewed by BusinessLine, said.

However, the operating companies’ market cap (before Mistry’s tenure) rose nearly 60 times to about ₹5-lakh crore by 2012 from less than about ₹8,000 crore in 1991. This is also more than three times the Sensex return in the same time period, the petition filed on behalf of Tata Sons Chairman Emeritus Ratan Tata, said.

Further, impairments of about ₹55,450 crore from unresolved issues relating to telecom business were also ignored during Mistry’s tenure. Therefore, the “lofty claims” of increased net worth of Tata Sons portrayed during Mistry’s tenure “are denied”, it added.

The Shapoorji Pallonji Group’s claims that Tata brand value increased by $5 billion was “incorrect” because as per Brand Finance (a consultancy firm), the value declined to $13.1 billion in 2017 from about $14.8 billion in 2014, it said, adding, SP Group had been making “blanket statements”.

Domestic CV business

In case of Tata Motors, domestic commercial vehicle business lost market share to hit a low of 44 per cent in FY17 (from 60 per cent a few years ago) and that domestic passenger vehicle business ceded market share to about 5 per cent in 2017 (from 12.4 per cent earlier).

Further, during Mistry’s chairmanship, market standing in telecom business also suffered, it said, adding, Tata Teleservices Ltd (TTSL) recorded significant deterioration in operating and financial metrics.

By FY17, TTSL’s total capital employed rose to about ₹75,000 crore, from ₹48,000 crore in FY12, while the gross external debt, including spectrum liabilities, rose to ₹44,000 crore (from ₹25,000 crore in FY12).

Mistry could not also close a deal with a global company in 2015, which would have helped in absorbing debt, and added that the current Tata Sons management has been taking decisive actions to strengthen and foray into new businesses.

On Thursday, the trustees of Sir Ratan Tata Trust and Sir Dorabji Tata Trust also filed a separate rejoinder in response to an affidavit filed by Cyrus Investments and Sterling Investment Corporation on June 27.

Published on July 30, 2020

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