Ratan Tata returned as chairman of the Tata Group this week in the wake of the ousting of Cyrus Mistry. Photo: Reuters/Vivek Prakash

The Tata Sons board has reacted sharply to allegations made by ousted chairman Cyrus Mistry and says it will respond in an appropriate manner.

In an official announcement India’s largest conglomerate said it was unforgivable that Mistry has attempted to besmirch the image of the Group in the eyes of its 600,000 plus employees.

It regretted that a communication marked confidential to Tata Sons board members was made public.

The statement pointed out that Mistry has been on the board since 2006 and said it was unfortunate that only after his removal did he make allegations and a ‘misrepresentation of the facts’ about business decisions that he himself was party to for over a decade in different capacities.

The Group said it was beneath its dignity to engage in a public spat over unfounded allegations appearing in the leaked confidential statement, and would respond in an appropriate forum.

Watching developments

Ratan Tata, who returned week to the helm of the company this week is reported to be looking for a partner to buy out the Tata Sons stake held by Mystry’s family.

Meanwhile, India’s Civil Aviation Ministry is keeping a close watch on developments over disclosures made by Mistry about AirAsia India, where Tata is a partner, and will act if something actionable is brought to its notice.

Mistry raised “ethical concerns” in Tata group’s aviation joint venture with AirAsia and alleged that a forensic investigation revealed fraudulent transactions of Rs 220 million (around US$3.9 million) involving non-existent entities in India and Singapore.

The Mistry controversy has rattled investors and this has led to a free fall in Tata Group stocks in the Indian bourses.

According to financial daily Economic Times after Mistry was unceremoniously removed as the chairman of Tata Sons on October 24, the group companies have lost over Rs 260 billion (around US$3.89 billion) in market capitalization.