Ratan Tata tried to sell TCS, made Corus deal expensive: Cyrus Mistry
Tata Sons former chairman Cyrus Mistry on Tuesday renewed his attack on the group by charging that the decision to acquire UK-based steelmaker Corus at the costly price $12 billion was taken due to a single man’s ego, indirectly pitching interim chairman Ratan Tata to be solely responsible.business Updated: Nov 23, 2016 01:33 IST
Tata Sons former chairman Cyrus Mistry on Tuesday renewed his attack on the group by charging that the decision to acquire UK-based steelmaker Corus at the costly price of $12 billion was taken due to a single man’s ego, indirectly blaming interim chairman Ratan Tata responsible for the deal.
Mistry also alleged that if Ratan Tata had his way, he would have sold off TCS to IBM. Currently TCS and JLR account for 90% of Tata group’s profits.
The new charges from Mistry have come in response to the earlier allegation by Tata Sons that there was no material contribution from Mistry to the growth of the group’s jewels. By mentioning the Tata Steel-Corus deal and TCS, the ousted chairman has also sought to signal that Ratan Tata too did not contribute significantly.
Continuing to reiterate his earlier stance that the acquisition of Corus in 2007 was a wrong business decision, Mistry said: “It is common knowledge that the decision to acquire Corus for over $12 billion, when only a year earlier it was available at less than half that price, was based on one man’s ego and against the reservations of some board members and senior executives. The overpayment made it harder to invest in the acquired assets which had been neglected, and thereby, placed many jobs at risk.”
In 2007, the acquisition by Tata Steel of a rival steel company four times its size and then the largest in Europe was written down by some analysts and brokerages, who said paying 608 pence for a company without linkages to key raw materials was risky. In fact, shares of Tata Steel had plunged 11% a day after the acquisition.
On TCS, Mistry cited an example when the Tatas had come very close to selling off the software company. Describing the incident as a ‘near death experience’, Mistry said: “It is worth recounting a little known fact. Midway during the TCS journey to date, Mr F C Kohli (a founding MD) was suffering from a cardiac condition. Mr Ratan Tata was then heading Tata Industries’ joint venture with IBM and approached Mr JRD Tata (former group chairman) with a proposal from IBM to buyout TCS. Mr JRD Tata refused to discuss the deal because Mr Kohli was still recovering in the hospital from his setback. On his return, Mr Kohli assured JRD that TCS had a bright future and the group should not sell the company. JRD Tata turned down the offer, demonstrating true vision. But, it was also a near-death experience for TCS at the hands of Mr Ratan Tata,” said Mistry.
Spreading praise for the management and staff at Tata group operating companies, Mistry also highlighted other companies such as Tata Chemicals, Tata Elxsi, Tata Global Beverages, Titan, and Voltas as leaders in their fields.
On JLR, Mistry said that the foreign luxury car company, which is a subsidiary of Tata Motors has benefitted from the strong leadership of MD, Ralf Speth and his leadership team, including former vice chairman Ravi Kant.
Mistry also said that the group’s decision in November 2003, to back CDMA as the platform for the group’s telecom business, was wrong. Mr. Tata’s decision against the advice of many of his own team members, “has led to a series of consequences that currently leave the company structurally challenged. Once again, one person’s judgment adversely affected the jobs of thousands,” said the statement from the office of Mistry.