TCS And Tata Steel Come To Ratan Tata’s Defence
Cyrus Mistry’s allegations on IBM, Corus get strongly refuted.
A former chief executive officer and deputy chairman of Tata Consultancy Services Ltd. (TCS) weighed in on the ongoing and bitter boardroom battle that is being waged between Tata Sons and Cyrus Mistry. FC Kohli, who was appointed CEO of the company in 1974, refuted Mistry’s claim that Ratan Tata had sought to sell the IT giant to IBM.
In a media statement issued by Tata Consultancy Services, Kohli said he was actively involved in the 1991-92 joint venture between Tata and IBM for hardware manufacturing in India, which was an untapped industry at that time.
I would like to reiterate that at no point at that time was there ever an intention of the Tata Group to sell TCS to IBM.FC Kohli said in the media statement
On Tuesday, Cyrus Mistry's office had released a statement raising questions over a host of business decisions taken by Ratan Tata over the years. In the statement, Mistry claimed Ratan Tata had proposed selling TCS to IBM, calling it a "near death experience" for the company.
In a separate media statement, Tata Steel Ltd. too discredited Mistry's claim that some board members and senior executives had reservations against the company's acquisition of Corus Plc in 2007. Tata Steel affirmed that the decision to acquire Corus was indeed approved by the Board of the company.
The entire acquisition was undertaken by following due board governance process under the supervision and oversight of the board of the company. The acquisition proposal was extensively deliberated in the board and the board approved the transaction.Tata Steel media statement
The statement issued by Mistry’s office on Tuesday said that the $12 billion Corus deal was overpriced at that time and the leverage had subsequently made it harder for the Tata group to invest in other acquired assets that had been neglected.
However Tata Steel said the Corus deal was part of the long-term strategy of the company to expand its operations internationally.
The acquisition of Corus Group Plc was based on the long-term strategy of the company to pursue growth through international expansion and enhance the portfolio of value added products. The performance of Corus Plc post acquisition validated the strategy till the black swan event of the global financial crisis structurally impacted the underlying demand conditions in Europe causing financial hardship to the entire industry.Tata Steel media statement
Mistry Responds
Cyrus Mistry's office responded to the statements issued by the two Tata Group companies, stating that the ousted chairman of Tata Sons had never claimed that the group intended to sell TCS to IBM.
Mr Mistry agrees with him (FC Kohli) that there was no intention of the Tata Group selling TCS to IBM or to any other company. The statement Mr Mistry made 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.Cyrus Mistry’s Office
On Tata Steel's acquisition of then Corus Plc, Mistry said that while the ultimate decision was unanimous, there were significant differences and reservations regarding the deal, as Corus was available for purchase at half the price a year before it got acquired.
