Ousted Tata Group chairman claims Tata Steel among businesses that could prompt $18bn worth of writedowns
The ousted chairman of Tata Group has claimed Tata Steel Europe is among five unprofitable businesses that could prompt $18bn (£14.7bn) worth of writedowns at the parent company.
Cyrus Mistry said the writedowns would be triggered by a “realistic assessment” of the fair value of companies within the group, including Tata Steel Europe, Tata Power Mundra and Teleservices. He added that the “legacy hotspots” were plagued by operational losses, interest and high capital expenditures.
Mistry, who took up the post of chairman at Tata Group in 2012, made the claims in a leaked email to the directors of Tata Sons, the conglomerate’s holding company, in an email dated Tuesday.
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On Monday, the board of Tata Sons dismissed him suddenly without explanation and replaced him with his predecessor Ratan Tata.
In the email Mistry claims he was made a “lame duck chairman” at the firm and called his abrupt departure invalid and illegal.
Mistry went on to criticise the conglomerate’s foreign acquisition strategy, he claimed its steel business faced potential impairments “in excess of $10bn” when it was taken on, “only some of which has been taken as of date [sic]”.
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Tata Steel's Port Talbot plant has reportedly swung back into the black over the summer.
In a report today, Moody’s Investors Service said cheap imports from China and Russia will continue to constrain European steel prices over the next year.
As well as putting pressure on European prices, imports will also soak up “a fair share of the expected growth in steel demand”, Moody’s said, based on the assumption that imports will remain high.