Cyrus Mistry says he inherited debt-laden enterprise, warns Tatas face $18 billion in writedowns
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Cyrus Mistry, who was abruptly removed as the Tata Sons Chairman, warned the group might be staring at $18 billion in writedowns because of five unprofitable businesses he inherited.
Mistry, who was removed as the chairman for non-performance, wrote an e-mail to the board members, revealed he was opposed to Tata’s airlines venture but the group continued as it was Ratan Tata’s passion.
"As there is no line of sight to profitability for the Nano, any turnaround strategy for the company requires to shut it down," Mistry wrote. "Emotional reasons alone have kept us away from this crucial decision.”
In his letter, which is obtained by Bloomberg, Mistry saidTata group 's Nano car business 'consistently' lost money and had to be shut down. Mistry also called Tata Steel Europe, Tata Power Mundra, Tata Tele as 'legacy hotspots'.
Mistry also stated he inherited a debt-laden enterprise saddled with losses and singled out Indian Hotels Co., Tata Motors Ltd.’s passenger-vehicle operations, Tata Steel Ltd.’s European business, as well as part of the group’s power unit and its telecommunications subsidiary as "legacy hotspots”.
Despite plowing 1.96 trillion rupees -- more than the net worth of the group -- into those units, they still face challenges and realistically assessing their fair value could result in writing down about 1.18 trillion rupees over time, he wrote.
On NTT Docomo fiasco over the payment of $1.17 billion, Mistry blamed his predecessor for striking such a questionable agreement. He wrote that an exit from the telecom business would cost as much as $5 billion, in addition to the payout to Docomo. Mistry said he had focused on increasing revenue at the telecom unit in the hopes of it being part of industry consolidation.
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Mistry, who was removed as the chairman for non-performance, wrote an e-mail to the board members, revealed he was opposed to Tata’s airlines venture but the group continued as it was Ratan Tata’s passion.
"As there is no line of sight to profitability for the Nano, any turnaround strategy for the company requires to shut it down," Mistry wrote. "Emotional reasons alone have kept us away from this crucial decision.”
In his letter, which is obtained by Bloomberg, Mistry said
Mistry also stated he inherited a debt-laden enterprise saddled with losses and singled out Indian Hotels Co., Tata Motors Ltd.’s passenger-vehicle operations, Tata Steel Ltd.’s European business, as well as part of the group’s power unit and its telecommunications subsidiary as "legacy hotspots”.
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On NTT Docomo fiasco over the payment of $1.17 billion, Mistry blamed his predecessor for striking such a questionable agreement. He wrote that an exit from the telecom business would cost as much as $5 billion, in addition to the payout to Docomo. Mistry said he had focused on increasing revenue at the telecom unit in the hopes of it being part of industry consolidation.
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