Cyrus Mistry accuses Tata Group of fraudulent transactions, warns of $18 billion write down

The Cyrus Mistry-Tata Group row is getting murkier by the day. Mistry, who was ousted as chairman of Tata Group on Monday, has hit back at the company's board of directors and his successor Ratan Tata in particular.

In an emailed statement to the company running into five pages, Mistry attacked Tata Group in a series of allegations, which included fraudulent transactions, and also warned of a potential $18 billion write-down, the Times of India reported.

Mistry went on to add that the Tata Nano (Ratan Tata's dream) project had failed and was required to be shut down in a bid to revive Tata Motors. "Emotional reasons alone have kept us away from this crucial decision. Another challenge in shutting down the Nano is that it would stop the supply of the Nano gliders (shells) to an entity that makes electric cars and in which Mr Tata has a stake," he said. 

A helpless chairman

Mistry also spoke about certain flawed strategies of the company and certain "questionable transactions." He also said he had inherited five "hemorrhaging businesses" namely Indian hotels, Tata Motors, Tata Steel Europe, Tata Power Mundra and Teleservices, which may be required to be written down.

"On the performance of the portfolio, as you are aware from my presentations to you in the recent past, if we look at the aggregate data between 2011 and 2015 and limit the analysis largely to the legacy hotspots (IHCL, Tata Motors, Tata Steel Europe, Tata Power Mundra and Teleservices), it will show that the capital employed in these companies has risen from Rs 1,32,000 crore to Rs 1,96,000 crore (due to operational losses, interest and capex)," Mistry added.

"This figure is close to the net worth of the group, which is at Rs 1, 74,000 crore. A realistic assessment of the fair value (of) these businesses could potentially result in a write-down over time of about Rs 1, 18, 000 crore."

Mistry further said that prior to his appointment, he was assured he will be given a free hand and that the previous chairman was to step back and be available for guidance and advice as when needed. But he said "the articles of association were modified, changing the rules of engagement between the trusts, the board of Tata Sons, the chairman and operating companies," after his appointment, the Indian Express reported.