Cyrus P Mistry, who was removed as the chairman of Tata Sons in 2016, has pointed to the poor performance of the Tata group under current chairman N. Chandrasekaran.

In an affidavit filed in the Supreme Court on Friday, Mistry claimed that the Tata Group had an adjusted net loss of Rs 13,000 crore in 2019 — the worst in three decades.

Mistry also demanded that group chairman emeritus Ratan Tata should reimburse all the expenses to Tata Sons since his departure in December 2012 in keeping with best global governance standards.

Mistry said this in his reply to the Tatas’ petition challenging his reinstatement by the National Company Law Appellate Tribunal (NCLAT) last December.

Citing the Tata group’s claim in select press statements which indicated that he was removed primarily for his non-performance and that Tata Sons was in loss under his watch, Mistry said that the loss numbers were arrived at by excluding the huge dividend that the group cash cow Tata Consultancy Services (TCS) was paying, which was averaging at over 85 per cent annually.

“The Tatas had sought to exclude the dividends from TCS to arrive at an operating profit in a bid to discredit my performance,” the affidavit said. Dividends from group companies are one of the major sources of revenue for Tata Sons.

Applying the same yardstick, he said the adjusted profit after tax (excluding profit from TCS) for the Tata group stood at a negative Rs 13,000 crore in 2019, which is the worst loss of Tata Sons in three decades, Mistry said in his replies to the apex court.

He further said that Tata Sons had a 282 per cent increase in operating losses in 2019 at Rs 2,100 crore up from around Rs 550 crore in 2016 and blamed it for “the abysmal performance in recent years to legacy issues”.

Mistry also questioned the belated claim by the Tatas that his inexplicable removal was due to the lack of performance, pointing to the unequivocal endorsement of his performance by the nomination & remuneration committee which was duly approved by the board just weeks before his dramatic removal.

Issued share capital

The plea also seeks full disclosure of the expenses of Ratan Tata’s office as these are related party transactions. “It was hoped that in keeping with the global best practices in corporate governance, Tata would reimburse his expenses over the past five years as was done by Jack Welch, the chairman emeritus of GE, who reimbursed all his expenses to the company.” After Mistry’s removal, the Tata Group’s debt rose by Rs 80,740 crore in just two years compared with Rs 69,877 crore in the previous four years when he was the chairman.

Mistry’s challenge is limited by section 244 under Companies Act 2013 which says only those holding at least 10 per cent of the issued share capital of a company can file a case of mismanagement and oppression.

However, issued share capital is the sum of equity shares and preference shares and though the Cyrus group holds 18.4 per cent of the equity shares of Tata Sons, they hold just 2.82 per cent of issued share capital of the company. Ratan Tata holds just 0.83 per cent of equity share capital of Tata Sons but his preference capital stock takes his issued shareholding to 31.43 per cent.