Ousted Chairman of Tata Sons Cyrus Mistry has said that the Tata Sons board and Ratan Tata were informed about Tata Power’s Rs 9,300-crore acquisition of Welspun Renewables Energy.
Earlier in the day, people privy to developments at Tata Group had told CNBC-TV18 that one of the tipping points that led to the ouster of Cyrus Mistry was his failure to keep Tata Sons’ board informed about the acquisition of Welspun Renewables Energy in September.In response to the report, a statement from Mistry’s office stated that earlier in the year, Tata Power had made a presentation to Tata Sons that a significant focus area would be the renewables sector and that the board appreciated it.“On May 31, 2016, a note was circulated to the board of Tata Sons and to Mr. Ratan Tata. He was sent all board notes as Chairman Emeritus providing information about the proposed Welspun transaction, and asking them if they needed any further information. The only board member to reply was Mr. Vijay Singh, a nominee director of Tata Trusts on the Tata Sons Board, and he expressed positive appreciation,” according to the statement.
“With no other view having been expressed, Tata Power executed the agreement on June 12, 2016,” it added.
Further, it said that Tata Power CEO Anil Sardana had made a presentation of the proposed acquisition to the Tata Sons board and more discussions were held as the funding required shareholders’ approval.
“The discussion covered all aspects of the transaction including the structure and the Tata Sons board unanimously approved the transaction. The minutes record that Mr. Nitin Nohria and Mr. Vijay Singh after discussing the proposal with Mr. Tata and Mr. Soonawala, while reiterating their view that the proposal should have come to the trustees earlier, approved the transaction," the statement said.
“Therefore, to even suggest that the Tata Sons board including the nominee directors of the Tata Trusts had not been adequately informed is contrary to the factual record,” according to the statement.Tata Sons’ Interim Chairman Rata Tata had primarily raised concerns over the non-communication of the Rs 9,300-crore acquisition of Welspun Renewables Energy, sources told CNBC-TV18 earlier in the day. The sources said members of Tata Sons board first heard of the acquisition through media reports.
Besides, Tata felt that the Welspun deal should have been explicitly discussed with the Tata Sons board, they said, adding, Mistry didn’t even seek Tata Sons board approval for the deal.
Tata Power had announced the decision to acquire Welspun Renewables Energy in June and bought the company in September for Rs 9,300 crore.
Tata had termed non-communication of deal a 'breach' of undertaking by Tata Sons with Tata Trusts, the people said. Also, it was pointed out that Tata Trusts couldn't assess if Welspun deal was in best interest of shareholders, they said.
Mistry had reportedly told Tata that the non-communication was in accordance with insider trading rules.
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