Cyrus Mistry was proven right on at least four of his warnings to the Tata Sons Board even before the latest court ruling

The clash between Ratan Tata’s pride and Cyrus Mistry’s passion led to the latter’s ouster from Tata Sons in 2016. Today, he has won the battle at the National Company Law Appellate Tribunal (NCLAT) but the battle is far from over.

But at the time of infamous exit in 2016, Mistry made some startling allegations. He blamed the board for the group’s ballooning debt and expensive mistakes. In his open letter, Mistry said that he was being forced to pay the price for trying to make things right⁠— moving to a low-debt and a high-profit regime.


After the NCLAT order today, Mistry called it a victory for “good governance and minority shareholder rights.” However, Tata Sons is likely to appeal at the Supreme Court, which will then have the final say on whether Mistry can actually return as the Executive Chairman of the conglomerate that has listed companies whose market value is over $100 billion.

In the three years of Mistry’s exile, some of his warnings have come true

The first and foremost was Jaguar Land Rover acquisition where he said that it would result in $10 billion of impairments. And his prediction came true earlier this year when Tata Motors took a $3.9 billion non-cash asset impairment – which is basically an acknowledgement of loss of value.

The next in line was the massive hole that Docomo’s telecom venture would leave them with. While Mistry wanted to fight a battle against the Japanese telecom major, the “hangers-on”, as Mistry called some of his older peers on the Board, wanted to pay up and settle the dispute. Mistry had predicted that the cost of exiting the business would be $4-5 billion and years after Mistry left the job, the group is known to have written a $6 billion cheque for the blatant error of starting a price war in the telecom sector.

Mistry also hit hard on Ratan Tata’s passion project, Nano ⁠— “the ₹1 lakh car”


As per the letter he wrote the board, the cost of making the Nano were always above the sale price. “As there is no line of sight to profitability of Nano, any turnaround strategy for the company requires it to shut it down. Emotional reasons alone have kept us away from this crucial decision,” lamented an irate Mistry. Now, the car will be manufactured on an order basis, said a report by an auto website.

However, Mistry’s biggest grouse was the group’s investment in aviation, particularly Air Asia. “My pushback was hard but futile. However, I was able to extract a promise of no debt to be raised at the level of JV as well as limiting Tata Sons investment to 30% of the $30 million equity,” he said in his letter. But eventually he was ‘made’ to execute a deal where Tata Sons would take 51% stake in $100 million venture wherein Tatas ended up investing in two airlines –AirAsia and Vistara.

Consequences unfolded, and in 2018-19, AirAsia’s losses widened by four times from last year to ₹671 crore. Making matters worse, a forensic audit revealed a fraud to the tune of ₹22 crore which were made to non-existent parties but they were never studied further as the impact was ‘non-material’, according to the Board. Once again, Mistry could stand and go “I told you so.”

If Mistry prevails at the top court, it could do irreparable damage to Ratan Tata, a hallowed corporate leader in India for decades. He accused Ratan Tata of shadow control to the extent that one of the board members would take a break from crucial decision making to make a phone call to him ⁠— which Mistry said violated the rules of insider trading.

However, Tata Sons released a statement saying that they will pursue appropriate legal recourse. “It is not clear as to how the NCLAT Order seeks to over-rule the decisions taken by shareholders of Tata Sons and listed Tata operating companies at validly constituted shareholder meetings. The NCLAT order appears to even go beyond the specific reliefs sought by the Appellant,” said Shuva Mandal, group general counsel at Tata Sons.

Therefore, Tata Sons is likely to give up on its fight against Mistry any time soon. Expect more dramatic turns in one of the biggest battles in the history of corporate India.

Here’s a timeline of the legal battle between Cyrus Mistry and Tata Sons over the last three years.


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