Two Tata veterans rubbished as “frivolous and incorrect” Cyrus Mistry’s charges that Ratan Tata wanted to sell TCS and his ego had inflated Corus acquisition cost, prompting the ousted group chairman to partially retract his remarks on Wednesday.
A day ago, Mistry claimed that Ratan Tata had put before JRD Tata a proposal to sell TCS to IBM. But the illness of FC Kohli, the first chief executive of TCS, during that period prevented any progress on the matter.
Without specifying the period, Mistry termed it a “near death experience” for TCS, saying: “Ratan Tata was then heading Tata Industries’ joint venture with IBM and approached JRD Tata with a proposal from IBM to buy out TCS. JRD Tata refused to discuss the deal because FC Kohli was still recovering in the hospital from his setback.”
According to FC Kohli, he had suffered a heart attack, claimed by Mistry, in 1984, whereas the Tata IBM joint venture was set up much later in 1991-92.
In a strongly worded statement on Wednesday, Kohli said that at no point did the Tata Group consider selling the crown jewel to IBM. “Mistry’s comments regarding the sale of TCS to IBM at some ‘unspecified point in time’ are not correct.”
“At no point at that time was there ever an intention of the Tata Group to sell TCS to IBM,” said Kohli, widely considered as the father of the Indian IT industry.
Mistry said on Wednesday that he never stated the Tatas were wanting to sell TCS to IBM or any other company. He said his Tuesday’s statement was based on “information from sources who were close to JRD Tata who informed him that it was Ratan Tata’s intention, and not the group’s intention, to sell TCS”.
Launching his attack, Mistry had also claimed on Tuesday that Ratan Tata’s “ego” led to “overpayment” for Corus, a rival steel company four times its size and then the largest in Europe which was available for half the price a year before the deal.
Tata Steel too came out strongly in defence of Ratan Tata, saying the acquisition was extensively deliberated and approved by the company board. B Muthuraman, who was Tata Steel vice-chairman and MD when the acquisition was made in early 2007, rubbished Mistry’s remarks of overpayment as “frivolous and unconsidered comments”. He said the $12 billion Corus acquisition was a well thought out decision and the price paid was only 50 million pounds higher than the next bidder.
In a statement, Muthuraman said: “The long term strategy of Tata Steel was well thought out after a lot of deliberation to grow the company through capacity expansion in India and internationally through inorganic growth.
“The overseas growth strategy was also to focus on accessing new markets through acquisitions, enhance the technology capability of the company and develop high end premium products.”
Reacting to Muthuraman’s statement late Tuesday, Mistry’s said he did not “say that the ultimate decision was not unanimous, but there were differences and reservations significantly, the fact that Corus was available for purchase at half the price in the recent past is undisputed”.
Under Mistry, sacked abruptly as chairman of the holding company of India’s largest conglomerate Tata Sons, the group put up Europe’s second largest steel maker Corus for sale due to its “deteriorating financial performance”.
The sacking and bringing back of his predecessor Ratan Tata in the interim has triggered an ugly war of words with both sides washing dirty linen in public.
Mistry had made the allegations in what was purported to be a rebuttal on charge of not contributing materially for the growth of TCS and Jaguar Land Rover, the British luxury carmaker acquired in 2008. This was the third in a series of statements by the ousted chairman of Tata Sons on October 24.
Mistry has made frontal allegations against Tatas, and particularly the way Ratan Tata conducted business, in each of the these statements.