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Tata’s tell-all spotlights reservations about SIA joint venture in India

Michelle Teo Published on Fri, Nov 04, 2016 / 11:28 AM GMT+8

Cyrus Mistry, Ratan Tata, Singapore Airlines

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Singapore Airlines has, unfortunately, been dragged into the controversy engulfing one of India’s legendary business empires. The dispute between former Tata Sons chairman Cyrus Mistry and the group’s patriarch Ratan Tata, who has resumed the post, has cast an unflattering light on SIA’s Indian joint venture (JV), Vistara. Mistry, who is also the son of the group’s largest individual shareholder, was unceremoniously replaced on Oct 24, barely four years after he took over from the elder Tata, apparently for underperforming. In a letter to board members, Mistry argued otherwise, saying he inherited a heavily indebted conglomerate after major overseas investments.

He also highlights the JVs with Malaysia’s AirAsia and SIA to establish airlines in India. Tellingly, Mistry says the two were presented to him as done deals, even though they were signed when he was already chairman. And, Mistry has alleged fraud at AirAsia India, saying that a recent forensic investigation “revealed fraudulent transactions of [INR220 million ($4.57 million)] involving non-existent parties in India and Singapore”. He says the transactions were not investigated until Air Asia India’s independent directors insisted on it. AirAsia India has since said it is looking into the allegations.

There are no such allegations about Vistara, in which SIA has a 49% stake. But Mistry’s claims raise some other questions, including the fact that the chairman at SIA’s much-lauded partner may have had misgivings about starting the airline in the first place.