Rift deepens between Cyrus Mistry and Ratan Tata

The vicious battle roiling India’s once-admired Tata Group has escalated further with Cyrus Mistry, the recently deposed chairman, saying the conglomerate’s ill-fated $12bn acquisition of Corus in 2007 was mainly to satisfy the “ego” of his predecessor Ratan Tata.

In his latest salvo, Mr Mistry — who is resisting attempts to force him off the board of several Tata operating companies — also claimed Tata Consultancy Services suffered a “near-death experience” more than a quarter of a century ago at the hands of Mr Tata when he proposed selling it to IBM. TCS is now the primary source of profits for Tata.

In a letter distributed to Indian media, Mr Mistry depicted his predecessor and rival as a man who paid little heed to his advisers and instead followed his own misguided instincts, especially in the Corus deal.

“It is common knowledge that the decision to acquire Corus for over $12bn, when only a year earlier it was available at less than half that price, was based on one man’s ego and against the reservations of some board members and senior executives,” the letter said. “The overpayment made it harder to invest in the acquired assets which had been neglected, and thereby, placed many jobs at risk.”

Tata Sons has reacted to the latest accusations from Mr Mistry by saying “all the companies concerned will clarify what the reality is”.

Meanwhile, some observers are questioning the purpose of Mr Mistry’s dredging up of old disagreements.

“It’s fairly pointless from a stock perspective,” said one analyst in Mumbai, who did not want to be named. “It has been so long ago. And maybe 20 years ago the company was very different from [how] it is today.”

The attempt to portray Mr Tata as lacking sound judgment comes as the bitter feud over control of the Tata Group and its subsidiaries engulfs Mumbai’s previously tight-knit Parsi business community.

Tata Sons, now led by Mr Tata, has moved to oust Parsi entrepreneur Nusli Wadia, an old friend of Mr Tata, as an independent director of Tata Motors, Tata Steel and Tata Chemicals after he sided with Mr Mistry in the fight.

Mr Wadia has served as an independent director of Tata Steel and Tata Chemicals for decades, while Mr Tata in return served as an independent director of Mr Wadia’s company until three years ago.

Mr Wadia this week threatened to sue Tata Sons for defamation for the claims made in the notice it issued seeking to remove him as an independent director of the two companies. Tata Sons promised to “respond appropriately” to Mr Wadia’s demands that it retract claims against him.

The no-holds-barred battle in what was once considered one of India’s most staid and conservative companies erupted last month, when Mr Mistry was unexpectedly deposed as chair of Tata Sons, the group’s holding company.

Mr Tata, who ran India’s largest conglomerate for 21 years before handing over to Mr Mistry four years ago, has returned as interim chair.

Following his dismissal, Mr Mistry sent a letter to the board in which he accused Mr Tata of saddling him with a series of bad business decisions and undermining his leadership. He further claimed that five major Tata businesses faced potential asset writedowns of up to $18bn.

Tata Sons responded in kind, accusing him of peddling “unsubstantiated claims and malicious allegations” and of overseeing weak performance while undermining the traditional structure of India’s largest conglomerate.

After deposing Mr Mistry from the chairmanship of Tata Sons, Mr Tata and his supporters have sought to remove him from the boards of the various Tata operating companies.

But some of boards have defied Tata Sons and sided with Mr Mistry, forcing the holding company — which is controlled by the Tata trusts — to call a series of extraordinary general meetings to try to force him out.