How Nusli Wadia's support of Ratan Tata disappeared over time and resulted in defamation suit
Nusli Wadia’s litany of complaints against Ratan Tata could come a cropper as documents now prove he had expressed his happiness with Ratan Tata and even offered help to shape up projects he now calls contentious.
Nusli Wadia's litany of complaints against Tata Sons could come a cropper, as documents now prove that he had happily played along with the very decisions he is now contesting.
Documents accessed by Firstpost show how Wadia, an independent director on board of three Tata companies, had expressed his happiness and approval on a host of decisions taken by Ratan Tata, then chairman of Tata Sons, and even complimented him and offered help to shape up projects he now calls contentious.
Here are the documents:
One of these pertain to the small car Nano, launched by Tata in 2008. Wadia's 13-page letter to shareholders of Tata Motors speak critically of the planning and execution of the Nano. In the letter, Wadia said he had differences with Ratan Tata over the continuation of the car. "After its commercial failure, which became evident not too long after its launch, I differed strongly with its continued operations and funding," said Wadia.
But Wadia, documents now show, was once keenly following developments related to the Nano plant in West Bengal. In August 2008, two months before Tata Motors decided to move out the plant from Bengal, Wadia even sent a mail to Ratan Tata, offering help in shifting the plant to Sangli in Maharashtra, home to the then Maharashtra finance minister, Jayant Patil.
"He (Patil) would like to come and meet you (Tata), and it would be nice if you could give him an appointment or be in touch with him," Wadia wrote in a mail dated August 27, 2008.
Equally interesting was Wadia's observations about Tata's investment in UK-based Corus Steel. In another letter, Wadia said he was against the investment, even accusing (Ratan) Tata of promoting Corus at the cost of Tata Steel. "I differed strongly with the acquisition of Corus for sound reason. However, a decision was ultimately taken by consensus. I had a fundamental difference on the strategy as to whether Tata Steel would be best served in expanding in the UK. I was strongly of the view that Tata Steel should concentrate on the rapidly growing Indian market, and develop its new Greenfield steel plant where the margins and returns would be far superior," wrote Wadia, in his blistering letter to Tata Steel shareholders early this month.
But what he did not say was that he was among the first to praise the move, calling up the then Tata Sons chairman and congratulating him on the acquisition. Tata, as a matter of gesture, wrote back on 1 February, 2007, saying, "Thank you so much for your message on Corus. I greatly appreciate your encouragement and your kind words."
Corporate sources in both Mumbai and Delhi find Wadia's stance on the corporate rivalry that exists between his son Jeh Wadia's low-cost airline Go Air and Tata promoting two airlines with partners (Air Vistara and Air Asia India) equally surprising. Interestingly, Tatas and Wadias — friends and allies for many decades — were facing off at opposition lobbies in the aviation sector, as the Ministry of Civil Aviation was contemplating dismantling the "five years and 20 aircraft norms for domestic carriers to fly international".
But now, documents show how Wadia wanted (Ratan) Tata's support in pushing his agenda in Delhi's corridors of powers, even writing a letter to the then Tata Sons chairman, who was also the chairman of Investment Commission set up by the government. Says the letter, dated December 6, 2008, "As you (Tata) know, the Civil Aviation industry in India has been going through a very difficult time sustaining substantial losses over the last 12 months. Though the government has been trying to address the issues with regard to taxation and other costs, the one issue that I believe has not been addressed is the raising of capital by the industry. Without this, industry will not be able to sustain itself on long term basis."
"I am therefore forwarding to you a note that I have prepared for consideration by the Investment Commission. If the commission considers it appropriate, I would greatly appreciate this issue being raises in its interactions with the prime minister and the respective ministers of the government. If there is any further information required by the commission, I would be happy to provide it," he wrote.
In the note, Wadia suggested that the government amend its policy and rules permitting 49 percent foreign investment to include foreign airlines, even disagreeing the government's view point that aviation was a "sensitive" sector. "The claim that the airlines industry is sensitive is not valid. Telecom and insurance were stated to be equally sensitive and in fact that was the earlier ground for not permitting FDI in those sectors," Wadia wrote in the note that he wanted Tata to circulate in the Investment Commission.
But now, both are ranged on opposite sides, Wadia's list of complaints is growing longer by the day, the latest being accusing Tata, now interim chairman of Tata Sons, and Tata trustee NA Soonawala of seeking price-sensitive information from Tata Group companies, thus violating Securities and Exchange Board of India’s (Sebi) insider trading norms.
Corporate analysts say it will take years for the dust to settle down in two of India's iconic business families. A mail to Wadia's office seeking comment, sent on 20 December, remained unanswered till time of publication.
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