Tata Sons is preparing a detail document to rebuff Cyrus Mistry’s allegations; rubbishes $18 billion devaluation

The tussle between Tata Sons and Cyrus Mistry is growing murkier by the day. Mistry has alleged he was just a ‘lame duck’ chairman and many decisions by the group were taken emotionally.

On the contrary, Tata Sons said Mistry was not a visionary Chairman and was drifting apart from the ethos of the Group.

The war came out in open after Mistry, in his5-page e-mail, accused Tata Group of not giving him a free hand and taking irrational decision. Mistry alleged the board members never gave him free hand in decision making.

However, Tata Sons, which is preparing a point-by-point reply to Mistry’s allegations, stated Mistry’s decisions were not in line with the Group.

Elaborating one such case, source told ET the Strategy 2025 documents prepared Mistry in September 2016 was out rightly rejected by the Tata Sons as the Strategy 2025 was majorly dependent on the performance of just one company TCS - the group's cash cow.

Sources told ET, board also found it did not have enough emphasis on returns on capital employed by Tata Sons. The plan, according to the board, also lacked financial discipline and vision for growth. It also did not offer much clarity on the strategic realignment of the group portfolio, including asset sales that were planned by Tata Sons under Mistry.

Meanwhile, Tata Sons stated Mistry was unable to run the Group and there was no breach of corporate governance in its decision to remove Mistry.

As per various reports, prior to his removal, Mistry was asked to step down by Ratan Tata and Harvard Business School dean Nitin Nohria, who is also a non-executive director of Tata Sons.

Mistry refused, which precipitated a vote on the matter.

"The board had overwhelmingly lost confidence in Mistry's ability to run the group and a majority of them voted in favour of his ouster. Many of them are successful businessmen in their own rights. It is also not unusual for a board to exercise its judgement and remove an incumbent chief executive officer or chairman without giving reasons,” an official in the know told ET.

Tata Sons is also going to take on Mistry’s allegations about Tata Nano project.

“The Nano plant could not be shut since it would stop the supply of the Nano gliders to an entity that makes electric cars and in which Tata has a stake,” a source told ET.

The sources cited say the investment in question is in a Coimbatore based start-up called Ampere founded by Hemalatha Annamalai.

The company sells electric vehicles like cycles, scooters, trolleys or special vehicles for the differently-abled predominantly in south and west India and has an annual production of 200-300 vehicles. The Nano plant in Gujarat on the other hand can make that many gliders and more in a day.

ET could not independently verify Ampere's sales numbers before going to press.