Tata Cos Re­fute All Mistry Al­lega­tions

Use an­nual re­ports to say they main­tain high gover­nance stan­dards

The Economic Times - - Companies: Pursuit Of Profit - Megha.Man­davia @times­group.com

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.

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