MUMBAI: Tata PowerBSE -1.24 %’s independent director Nawshir H Mirza said the board unanimously endorsed Cyrus Mistry’s proposal to buy Welspun Renewables for $1.2 billion as it was in line with the company’s strategy to quickly build a large non-conventional energy portfolio.
In a chat with ET, Mirza said the board is entitled to decide on such issues and that the acquisition was above board. “Tata Power board endorsed the acquisition of Welspun Renewables but the initiative came from the management side,” said Mirza, who is an independent director since 2006.
“Tata Power has been building wind farms for the past 9 years and such a large purchase of assets was a continuation of the strategy to quickly build a larger non-conventional energy portfolio,” he said.
Mirza’s version challenges the narrative espoused by people close to Tata Sons that non-communication with Tata Sons and Tata Trusts on the issue of acquisition of Welspun’s renewables business was one of the reasons behind Mistry’s ouster.
Mistry had refuted these allegations by pointing out that a note on the deal was circulated among all board members of Tata Sons (including Ratan Tata, who is chairman emeritus) with details of the deal. The members were also asked if they wanted more information.
“The board is entitled to take decisions on any acquisitions by the company,” Mirza said. He did not comment on whether Tata Sons was required to be informed about the deal prior to the announcement but reiterated that the Tata Power board had fulfilled its fiduciary duties. People close to the Tatas, however, had a different account of events. They said while the Tata Sons board did discuss the deal in a lot of detail, at its board meeting on June 28 and 29, this happened after the agreement. ” The shareholder’s agreement had been signed earlier that month so the discussions happened after the event.”
These sources said that while the Tata Sons board had been informed about the move to acquire Welspun’s renewable energy arm, formal board approval wasn’t sought. “Tata Sons is a major shareholder in Tata Power. Tata Sons board needs to approve a capital expenditure of this magnitude,” said one of the people cited. They didn’t question the wisdom of the deal.
Mirza also said they had unanimously recorded their recognition of Mistry’s contribution to the company, including his decision to buy Welspun Renewables.
“After the independent directors at many private meetings evaluated the performance of Cyrus Mistry, we all said he is a good chairman and has contributed good values in that role to the board and to the management,” said Mirza.
A mail sent by ET seeking comment from Tata Power remained unanswered till the time of going to press.
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Source: Economic Times
