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BSE, NSE, SEBI ask Tata Sons to clarify allegations made by ousted Tata Chairman Mistry


Big News Network.com
27 Oct 2016

MUMBAI, India - In one of India’s most high-profile expulsions, Tata Group’s Chairman Cyrus P Mistry, who took charge from Ratan Tata in 2012, was shown the door by the company’s directors on Monday. 

Following his ‘unjust’ exclusion from the company, Mistry sought to send a letter to the board of directors revealing the company’s bad health under the group. Now, Indian stock exchanges BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) have asked Tata Group’s listed companies to elucidate Mistry’s revelations made in the letter on Wednesday.

Accusing the directors of wrongfully dismissing him, Mistry wrote in the letter that the group faces a whopping $18 billion (Rs.118,000 crore) write down over time as the companies failed to generate profit. 

Mistry’s emailed letter said, “The capital employed in these companies had risen from Rs 132,000 crore to Rs 196,000 crore, due to operational losses, interest and CAPEX. This figure is close to the net worth of the group, which is at Rs 174,000 crore.”

"The sadness of the action and the lack of explanation has led to all manner of speculation and has done my reputation and the reputation of the Tata Group immeasurable harm,” the letter continued.

Accusing the directors of using him as a ‘lame duck’, he said, “I cannot believe that I was removed on grounds of non-performance. I hope you do realise the predicament that I found myself in. Being pushed into the position of a 'lame duck' Chairman, my desire was to create an institutional framework for effective future governance of the group.”

Mistry’s detailed five-page letter referred to all the businesses that Tata directors mishandled and could be prevented if he was given a ‘free hand’ which he was promised by Ratan Tata. 

Among several allegations, the letter mentioned that India Hotels, Tata Motors, Tata Steel Europe, Tata Power Mundra and Tata Teleservices failed to generate profit. In relation to the letter, exchanges sought clarification from Tata’s directors.

The letter said, “You are advised to provide the said information along with the sequence of events in chronological order and the material impact of this article on the company.”

In addition to the exchanges, the Securities and Exchange Board of India (SEBI) also demanded a detailed report from the Tata Sons as the market regulator began its quest for a possible violation in the company.  

A senior SEBI official said, "We are taking note of each and every development and will act immediately if there is any hint of possible violation of corporate governance and listing norms or any other regulation under our jurisdiction.”

Ratan Tata has been named the interim Chairman of the group till they bring a new chairman on board. Tata directors are however yet to respond to letters by exchanges and SEBI.

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