DELHI/MUMBAI – Group companies in the salt-to-software Tata Sons conglomerate faces potential writedowns to the tune of close to $18 billion due to investments in unprofitable businesses, according to an internal letter that ousted Chairman Cyrus Mistry sent to the company's board.
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Mistry was shunted out of the company on Monday by the Tata Sons board for reasons not officially made public by the group, however, sources told Reuters that Mistry had lost favor with family patriarch Ratan Tata and the powerful trusts, which own two-thirds of the group.
Mistry said in the letter that Indian Hotels Co , passenger-vehicle operations of Tata Motors Ltd , the loss-making European steel operations of Tata Steel , its telecom venture and a ultra mega western Indian power plant of Tata Power are "legacy hotspots" of the company.
"A realistic assessment of the fair value (of) these businesses could potentially result in a write down over time of about Rs118,000 crores ($18 billion)," said Mistry in an e-mail seen by Reuters.
A spokesman for Tata Sons declined to comment. A spokeswoman for Cyrus Mistry declined to comment.
(Reporting by Nidhi Verma, Promit Mukherjee and Aditi Shah; Editing by Euan Rocha)