Group firms lose ₹40,000 cr in mkt cap in three days

MUMBAI: Ten Tata Group firms lost a combined ₹44,000 crore in market value in the last three days after ousted Tata Sons chairman Cyrus Mistry warned the group that it may have to writedown around $18 billion due to losses in five companies — Tata Motors, Tata Steel, Indian Hotels, Tata Teleservices and Tata Power.

The 10 firms include TCS, Tata Motors, Tata Steel, Titan, Tata Power, Tata Communications, Tata Chemicals, Indian Hotels, Tata Global Beverages and Trent.

On Thursday, excluding Tata Consultancy Services (TCS), all group stocks closed in the red on the Bombay Stock Exchange. Indian Hotels recorded the steepest fall of 5.8% followed by Tata Global Beverages (down 5.1%), Tata Communications (down 1.7%), Tata Motors (down 1.4%), Tata Power (down 1.4%), Tata Steel (0.4%). TCS, however, closed 0.7% higher. Intra-day, the shares had declined up to 7%.

Under Mistry, several companies, including Tata Steel and Indian Hotels, had begun a restructuring exercise to cut losses. Tata Steel, for instance, put its loss-making UK operations on the block and Indian Hotels sold several loss-making properties overseas like the Taj Boston, and gave up the chase to acquire Belmond (earlier Orient Express Hotels). There is grow ing uncertainty about whether these measures will continue under a new chairman.

“It was widely believed tha Mistry was the driver of Tata Steel’s strategy to sell-off its European assets,” said CLSA analyst Mahesh Nandurkar. His departure may raise questions on continuation of this strategy and talks with Thyssenkrupp may now happen only under a new chairman, he added.

“The long-term capex plans o companies may get reassessed to ensure that they are in conso nance with the new leadership’s vision for growth,” said Ajay Bodke, chief executive officer and chief portfolio manager at Prab hudas Lilladher.

Mistry had said in his email to the board that he inherited a debt laden enterprise saddled with losses and singled out Indian Hotels, Tata Motors’ passenger vehicle operations, Tata Steel’s European operations, as well as part of the group’s power unit and its telecommunications subsidi ary as “legacy hotspots.”

However, in a statemen issued on Thursday, Tata Stee clarified that its financial state ments are prepared on a going concern basis and present true and fair view of the state of affairs of the company.