Deposed Tata chairman Cyrus Mistry says removal was illegal

Cyrus Mistry has condemned as illegal his dismissal from the helm of India's Tata Group, in a blistering attack on the record of his predecessor Ratan Tata, in which he claimed that five of the conglomerate's major businesses faced asset writedowns worth $18 billion.

Mr Mistry was sacked as chairman of holding company Tata Sons on Monday, an abrupt move that stunned an Indian business community long used to stable management at the country’s largest group by sales.

In a lengthy email to Tata Sons directors, seen by the Financial Times, Mr Mistry accused them of sacking him "without so much as a word of explanation" – an action he condemned for its "invalidity and illegality", without elaborating.

Tata Sons declined to comment on the allegation, but one person close to the company said it appeared groundless.

People with knowledge of the circumstances of the sacking said it was triggered by a loss of confidence in Mr Mistry by Mr Tata, who led the group for 21 years until December 2012, and was reinstated as chairman on Monday on an interim basis.

Mr Tata had promised to give Mr Mistry space to run the group on his terms, but the ousted chairman complained of damaging interference by his predecessor that left him in “the position of a ‘lame duck’ chairman”.

In his most serious allegation, he accused Mr Tata of negotiating a joint venture with Malaysia-based low-cost carrier AirAsia behind his back: a move that proceeded despite Mr Mistry’s “hard but futile” resistance.

Mr Mistry blasted the Tata Nano, one of Mr Tata's pet projects, which was billed as the world's cheapest car at its launch in 2009.

The car had no path to profitability, and “emotional reasons alone have kept us away from this crucial decision [to abandon it]”, he said.

Mr Mistry accused Tata’s automotive business of engaging in “aggressive accounting” under Mr Tata by capitalising product development costs, as well as extending customer credit with “lax risk assessment”, leading to a damaging build-up of loan defaults.

Mr Mistry further criticised Mr Tata's aggressive foreign expansion, which he said had left "a large debt overhang", notably at the conglomerate's European steel business, secured through the $13 billion acquisition of Corus in 2007.

– Copyright The Financial Times Limited 2016.