Ten Tata Group firms lost a combined R44,000 crore in market value in the last three days after ousted Tata Sons chairman Cyrus Mistry warned the group that it may have to writedown around $18 billion due to losses in five companies -- Tata Motors, Tata Steel, Indian Hotels, Tata Teleservices and Tata Power .
The 10 firms include TCS, Tata Motors, Tata Steel, Titan, Tata Power, Tata Communications, Tata Chemicals, Indian Hotels, Tata Global Beverages and Trent.
On Thursday, excluding Tata Consultancy Services (TCS), all group stocks closed in the red on the Bombay Stock Exchange. Indian Hotels recorded the steepest fall of 5.8% followed by Tata Global Beverages (down 5.1%), Tata Communications (down 1.7%), Tata Motors (down 1.4%), Tata Power (down 1.4%), Tata Steel (0.4%). TCS, however, closed 0.7% higher. Intra-day, the shares had declined up to 7%.
Under Mistry, several companies, including Tata Steel and Indian Hotels, had begun a restructuring exercise to cut losses. Tata Steel, for instance, put its loss-making UK operations on the block and Indian Hotels sold several loss-making properties overseas like the Taj Boston, and gave up the chase to acquire Belmond (earlier Orient Express Hotels). There is growing uncertainty about whether these measures will continue under a new chairman.
“It was widely believed that Mistry was the driver of Tata Steel’s strategy to sell-off its European assets,” said CLSA analyst Mahesh Nandurkar. His departure may raise questions on continuation of this strategy and talks with Thyssenkrupp may now happen only under a new chairman, he added.
“The long-term capex plans of companies may get reassessed to ensure that they are in consonance with the new leadership’s vision for growth,” said Ajay Bodke, CEO and chief portfolio manager at Prabhudas Lilladher.