Ousted Tata Sons chairman Cyrus Mistry made his written representation to shareholders of each of the six Tata group firms that have called for EGMs this month, seeking his removal as director on request from holding company Tata Sons.
On Tata Consultancy Services, Mr. Mistry said it had outperformed peers and the BSE Sensex in the the last 4 years. “Improving its ability to convert profits into cash and dividends for shareholders and building up a war chest for potential inorganic growth opportunities was a key imperative. Chandra (CEO N. Chandrasekaran) and his team have responded to these suggestions and have helped improve the cash conversion from 49 per cent in 2012 to 92 per cent in 2015... despite growth in dividends paid, the cash and cash equivalents in TCS continue to grow.”
Mr. Mistry also wrote about the challenges that faced Indian Hotels and how his strategy helped turn it around.
“IHCL was facing several challenges in 2012. Expensive overseas acquisitions, including the Pierre (hotel), were bleeding and the Sea Rock project had capital blocked and was losing value. As capital was stuck in cash-guzzling assets, there had been almost no investment to support the domestic market — which was at a critical juncture, being flooded by MNC competition,” said Mr. Mistry.
He said that in his tenure, Indian Hotels saw strengthening of its balance sheet, reduced risks of further losses and future impairments, strengthened operations and quality of assets and improving profitability.
Negative returns
In a representation to Tata Steel shareholders, Mr. Mistry said that the total capital employed in Tata Steel Europe grew from Rs. 67,000 crore in FY12 to more than Rs.93,500 crore in FY15. The amount of capital earning negative returns posed a risk to the overall group, he said.
“It would give me no greater pleasure than to see a strong and structurally viable U.K. Strips operations, as part of a broader global joint venture, which would make it a much larger player in the European market, and ensure its long-term viability,” said Mr. Mistry.
Addressing Tata Motors shareholders, Mr. Mistry said that the focus had been on regaining lost ground.
“Improvements are showing green shoots now – in FY16, the standalone PBT ... improved to Rs.150 crore, compared to a loss of Rs.3,975 crore in FY15. The company continues to seek avenues to unravel its cross-holding in group companies and exit strategically from unrelated businesses to generate funds for growth,” said Mr. Mistry.
In his missive, Mr. Mistry also addressed Tata Chemicals shareholders, touching upon the status of the revival plan for the company.
Turnaround plan
On Tata Power, he said that the situation at CGPL, Mundra, was an overwhelming threat to the company’s survival. Commenting on the turnaround, he said, “Profit after tax improved from negative Rs. 2,100 crore in FY12 to negative Rs.306 crore for FY16. The company is confident of securing appropriate relief through the judicial process.”
