Tata Cos Refute All Mistry Allegations
Use annual reports to say they maintain high governance standards
Mumbai: Tata Group companies Tata Steel, Tata Motors, Tata Power and Indian Hotels Company have all opted to utilise their annual reports to deny the various allegations made by former group chairman Cyrus Mistry and proclaim they maintain highest corporate governance standards.
Mistry, who was ousted as chairman of Tata Sons in October last year, had alleged mismanagement, poor business decisions, falling corporate governance standards, violation of insider trading norms, and gagging of independent directors at the Tata Group, shocking the investor community and Corporate India alike.
The ouster and allegations had led to a fall in share price of various Tata companies.
Tata Steel used its annual report for the last financial year to refute Mistry’s allegation that former chairman Ratan Tata decided to buy UK-based Corus for more than $12 billion despite reservations raised by some board members and senior execs.
“The board wishes to place on record that the acquisition and subsequent financing arrangement were undertaken following due governance processes under the supervision and oversight of the board,” the company said in the report. “The acquisition of Corus was based on long-term strategy of the company to pursue growth through international expansion and enhance the portfolio with value added products,” it said.
Tata Motors has also denied all the charges made by Mistry on the subject of investment in Nano and its accounting practi- ces in its annual report. Mistry had alleged that Ratan Tata’s emotional attachment to the loss-making Nano car project has kept the project alive.
The company said it has filed detailed explanations with the regulators on the allegations and reiterated that it complied with all governance standards.
Mistry had also questioned the foreign acquisition strategy of Indian Hotels and “onerous terms” of the lease for The Pierre in New York, which made it a challenge to exit. However, the company said most of these investments were made before the global economic meltdown and the leasing terms of the The Pierre were not optional.
“The hotel has one of the most sought-after banquet venues in the New York,” Indian Hotels said in its annual report. “Leasing of the Pierre was strategically important for the company to establish its brand as well as visibility in the USA, which is a key feeder market for Taj Group’s In- dian operations,” Indian Hotels said in its annual report.
It said the lease terms of The Pierre had remained largely unchanged for a longer period and the hotel was run and operated on almost similar terms by earlier operators...and was thus available to the company on similar terms.
Tata Power, too, denied allegations by Mistry that before his chairmanship, the firm awarded some of the major contracts to Ratan Tata’s friend Mehli Mistry’s companies without following proper processes. Mistry had also questioned the aggressive bid for the Mundra ultra mega power project based on low-priced Indonesian coal. “The current management has reviewed the old contracts awarded and confirmed that due process had been followed...duly confirming that the company has not been subjected to any commercial deterrent or loss over the period of such contracts,” Tata Power said in its annual report.