Wadia questions acquisitions made by Tata Chemicals

Mumbai, Dec 15 (IANS) Ahead of the December 23 extraordinary general meeting (EGM) called for his removal as independent director of Tata Chemicals Ltd (TCL), Nusli Wadia said on Thursday that he and other board members expressed concerns over acquisition of the Brunner Mond Group for Rs 800 crore and merger of HLCL (Haldia Plant) with the company.

"I as well as some other Board members expressed serious apprehensions on the proposal for the acquisition of the Brunner Mond Group, having soda ash business operation in UK, Keneya (Magadi Soda) and Netherlands at a cost of around Rs 800 crore for sound reasons," Wadia said in representation to shareholders of the company.

He said the board members had expressed concerns on the fundamental issues involved in the overall arrangement, the risk involved and the assumptions and projections made for profitability.

They doubted the rate of return as envisaged in the proposal, the letter said.

In the 12-page representation to shareholders in which Wadia appealed to them to vote against his removal as an independent director, he also said that the acquisition decision was taken by consensus but profitability became negative and continued to remain so after the same (acquisition).

"I differed strongly in the proposal for the merger of HLCL (Haldia plant) with the company, which involved an investment to the tune of Rs 347 crore," he said.

Further, Wadia said that he raised serious concerns over the year for "providing continuing financial resources" of the company towards the "overseas businesses and assets" which were continuously "underperforming and incurring substantial losses".

"This has now led to an impairment on this acquisition of approximately Rs 1,600 crore," he said.

Wadia mentioned that the company is currently looking to extricate itself from substantial part of its Britain business including the pension fund issues which it has inherited from the acquisition.

He also said during the last 10 years mainly due to various acquisitions, the consolidated debt of the company went up from Rs 1,827 crore to Rs 8,695 crore, an increase of Rs 6,800 crore.

"This included the funding required for other joint ventures and subsidiaries. The total impairment of all the various investments made is approximately Rs 2,000 crore," he added.