Amid Tata-Mistry ongoing battle, ousted Chairman Cyrus Mistry on Tuesday hit back at the Tatas, rejecting the charges of not contributing anything to the group’s cash-rich firms - Tata Consultancy Services (TCS) and Jaguar land Rover (JlR). He also alleged that Ratan Tata once tried to sell the IT giant to IBM and his ‘ego’ led to bad business decisions like Corus acquisition at a double price than that of its original cost. Adding more allegations against the Tatas on the businesses of both the companies, Mistry also said that Tata’s contribution to the success of TCS and JlR is an ‘illusion’.
Meanwhile, Nusli Wadia, who was an independent director at Tata Steel for nearly 40 years, also hit back Tata Sons, threatening that he might initiate civil and criminal proceedings if Tata Sons did not withdraw its November-11 notice or failed to prove its charges. He demanded Tata Sons to prove its ‘false and defamatory’ allegations in the notice, one of which claimed that he was acting with Cyrus Mistry against the Tata Group.
In a series of statements issued by Cyrus Mistry’s office on Tuesday, the letter said, “Ratan Tata had pitched for selling TCS to IBM, a ‘near death experience’ for group’s crown jewel. Ratan Tata’s ‘ego’ led to Corus deal at a high price.”
“Ratan Tata’s decision to acquire steelmaker Corus for more than $12 billion, when a year earlier it was available at half the price, went against the reservations of some board members and senior executives,” it added.
Without giving the timelines, the letter also claimed the then chief FC Kohli’s illness had prevented JRD Tata from going ahead with Ratan Tata’s proposal. “Ratan Tata was then heading Tata Industries’ joint venture with IBM and had approached JRD Tata with a proposal from IBM to buyout TCS. JRD refused to discuss the deal because Kohli was still recovering in the hospital,” it said.
However, Kohli, considered the doyen of the domestic software industry, flatly refused the proposal saying TCS has a bright future and the group should not sell the company. “JRD turned down the offer, demonstrating true vision. But it was also a near-death experience for TCS at the hands of Ratan Tata,” the letter claimed.
Tatas and IBM had started the joint venture with equal holding in 1992, and dissolved it in 1999, while TCS was founded in 1968 and was taken public in 2004. JRD stepped down from chairmanship of the group in 1991, while Kohli stepped down from TCS in 2000.
The letter, which is third in a series of clarifications issued by Mistry’s office, also lamed Ratan Tata’s ‘ego’ for bad business decisions, including the buyout of British steelmaker Corus at a high cost and also sticking to the CDMA technology for its telecom business imperiling thousands of jobs.
In the telecom business, Tata made a strategic decision to enter CDMA space as against the popular GSM, despite advised to the contrary, Mistry said calling it a case of one person’s judgment adversely affecting jobs of thousands.
In its earlier two clarifications, Mistry camp had focused on the allegations of the group drifting away from the Tata values during his tenure, independence of directors in group companies, explanations on a surge in expenses and the huge write-offs, which the group had to take under his leadership.
In a nine-page letter on November 10, Tata Sons had accused Mistry of not really contributing to the success of JlR and TCS, saying these assets were inherited by him from Ratan Tata who had nurtured them and that the ousted chairman could not take credit for their stellar performance.
In the statement issued on Tuesday, on the contrary the Mistry camp gave credit for these two companies’ success to their leadership under Kohli and N Chandrasekaran at TCS, and Ralph Speth and Ravi Kanth at JlR. “Mistry, being the non-executive Chairman, gave them a strategic direction, ensured a future proofing of the businesses and also gave them time,” the letter said.
“As the Chairman of Tata Sons and TCS, Mistry’s access to senior stakeholders across the world was an enabling platform,” the letter said, while claiming that he met at least 60 global chief executives to help TCS. To buttress the point, Mistry’s letter enlisted training of 1.35 lakh people in digital area, the Japanese joint venture, industry leading growth in Europe and a surge in high revenue clientele during his tenure.
As per the letter, Mistry’s four-year tenure between December 2012 and October 2016 saw TCS’ cash and equivalents doubled to Rs 20,500 crore with a surge in cash conversion, which helped it declare a special dividend last year.
“The best is yet to come for TCS. JlR is at a critical juncture where decisions taken on Tuesday will decide its future resilience. JlR strategy under Mistry’s chairmanship has been to achieve scale as well as minimise currency and supply chain risks by investing in new facilities,” it said, while underlining that it is now a stronger company that will reward the shareholders more consistently in future.
Tata Sons asks Tata Power to call EGM; Tata Chem sets date
Seeking to tighten its grip over the $103-billion group, Tata Sons asked Tata Power to call a meeting of shareholders to consider removing Cyrus Mistry as director of the company even as another group firm, Tata Chemicals, fixed the date for the same.
Tata Sons, the holding company of the salt-to-software conglomerate, had last month ousted Mistry as its chairman and has since then sought to remove him from the group’s listed companies, a few of which he heads and is on board of others.
Tata Power in a regulatory filing said it has received a notice from its principal promoter Tata Sons seeking convening of an extraordinary general meeting of shareholders to oust Mistry as director on the company board.
On the other hand, the board of Tata Chemicals, where such a request had previously been made by Tata Sons, fixed December 23 as the date for calling the EGM for removing Mistry as well as friend-turned-foe independent director Nusli Wadia as directors of the company. Mistry is chairman of Tata Chemicals.
The board of Tata Global Beverages, the Indian partner of Starbucks Coffee, last week voted him out as the chairman. But he continues to be on its board as well as other firms and can be removed only by a shareholder vote.
Tata Sons used its commanding 73.26 per cent stake in the group’s most successful company, Tata Consultancy Services (TCS), to remove Mistry as its chairman. An EGM has been called on December 13 to remove him as director.
Indian Hotels Co ltd, the firm that runs the Taj Group of hotels, has called a meet on December 20 to consider Tata Sons’ proposal to remove Mistry as director of the company.
Tata Sons holds 28.01 per cent of share capital of IHCl.
In a sudden and dramatic turn of events last month, Mistry was unceremoniously removed as the chairman of Tata Sons and replaced by his predecessor Ratan Tata in the interim, triggering a confrontation between the single-largest shareholder and the Tatas.