Their statement has also said Mistry was selected after the committee “failed to find an alternative”.
In evaluating Mistry’s record, the statement says, the dividends from Tata Consultancy Services (TCS) should not play a role since Mistry did not manage TCS and the company did not need any funds from Tata Sons. Dividends from all 40 other companies have continuously declined under Mistry, it continues, going from Rs 1,000 crore in 2012-13 to Rs 780 crore in 2015-16 (where the second figure also includes additional interim dividend of Rs 100 crore which would normally have been filed under 2016-17, but hasn’t because of budgetary changes). In the same period, expenses on other than interest on debts increased substantially, the statement says, with expenses on staff going from Rs 84 crore to Rs 180 crore and other expenses from Rs 220 crore to Rs 290 crore (excluding exceptional expenses).
Discussing Mistry’s hiring, the statement said Mistry’s explanation of how he would manage the Tata group sat well with the selection committee and they “failed to find an alternative candidate”. However, it continues, Mistry has not implemented any of the ideas he suggested to the committee, which had contributed to his hiring in the first place.
What Mistry did do, the statement alleges, is use the group’s public relations machinery to constantly emphasise the “supposedly good work being done by and under the new leadership”, pointing to what he called “legacy” issues or problems he had inherited to account for any trouble.
“Nobody will deny that there were some problem companies but surely Mr. Mistry was fully aware of them since he was associated with the parent company, Tata Sons Limited, as a Director on the Board for many years prior to his appointment as Executive Vice Chairman in 2011 and then as Executive Chairman in 2012. He voluntarily took this position, knowing the composition of the Tata group and its many strong companies as well as the weaker and problem companies – which he presumably took on as a challenge for ‘turning around’ those difficult situations.
Yet, after four years of full-time involvement and executive authority, we continue to be told how these ‘legacy’ problem areas are a major drag on Mr. Mistry’s otherwise good performance. How many more years would we be told this same story?”
And Mistry’s claims of good performance were not his to make, the group has said.
“The media is fed with the total group figures over the past four years as evidence of the progress but it is not highlighted that these aggregate figures which show a good picture are largely (if not only) due to the excellent performance on all parameters of just two companies, namely, TCS and Jaguar Land Rover (JLR) which is a wholly-owned U.K. subsidiary of Tata Motors. There is no complaint about these good legacies! These two jewels in the Tata crown were also inherited by the new Chairman from the previous Chairman, Mr. R. N. Tata, who was also responsible for the acquisition of JLR by Tata Motors in 2008-09 and personally worked with the then management of Tata Motors to turn JLR around. These two companies probably account for around 50% of the total turnover and probably over 90% of the total profits of the whole group and have been performing successfully continuously over the past many years, for which Mr. Mistry cannot take credit.”
Gross indebtedness has also risen under Mistry, going from Rs 69,877 crore to Rs 225,740 crore, the statement said. However, Mistry allegedly did not respond well to any criticism.
“It is evident that the group under Mr. Mistry’s leadership was intolerant to critical reports about the actions taken under his aegis. Over the past four years, only a very few such partially negative reports have appeared in some parts of the media – the most recent one being by the highly respected ‘Economist’ magazine of the U.K., which was really a well-balanced and critical review of the Tata group’s performance in recent years and which was reproduced by another respected Indian daily. Even this report was vociferously refuted in the strongest terms by the PR machinery of Tatas as being biased and incorrect.”
The Tata group has also hit out at Mistry on a number of other grounds. They have said that there was no interference from the Tatas and this is a lie that is being used to mislead people. They have also questioned his decision not to resign as the chairman of Tata operating companies, saying it was clear that these positions were given to him only because of his position at Tata Sons.
They have also lambasted him for recent development at the Indian Hotels Co. Ltd., calling his methods “devious”.
“The recent development in the Indian Hotels Co. Ltd. (IHCL) now seems to reveal the true colours of Mr. Mistry and his ulterior objective. Having been replaced as the Chairman of Tata Sons, where the majority of the Board and the major shareholders had expressed lack of confidence, Mr. Mistry is trying to gain control of IHCL with the support of the Independent Directors of the Board. He has cleverly ensured over these years that he would be the only Tata Sons representative on the Board of IHCL in order to frustrate Tata Sons’ ability to exercise influence and control on IHCL. In hindsight, the trust reposed by Tata Sons in Mr. Mistry by appointing him as the Chairman four years ago has been betrayed by his desire to seek to control main operating companies of the Tata group to the exclusion of Tata Sons and other Tata representatives. Indeed, this strategy of being the only Tata Sons’ representative on the Boards of the operating Tata companies, seems to have been a clever strategy planned and systematically achieved over the last four years. It is unfortunate that Tata Sons, acting in good faith, did not anticipate such devious moves by Mr. Mistry and thereby did not inform the other Directors of the operating companies about its dissatisfaction with Mr. Mistry at the level of Tata Sons. However, we will now do whatever is required to deal with this situation.”