| Log in
Reuters Photo Credit: Reuters

Former TCS chief, Tata Steel MD rebuff Cyrus Mistry’s allegations

By PTI
23 November, 2016

F C Kohli, the first chief executive of TCS, today rebutted ousted chairman Cyrus Mistry’s claim that Tata Group at one point wanted to sell the software major, now considered its crown jewel, to global tech giant IBM.

“Mistry’s comments regarding the sale of TCS to IBM at some ‘unspecified point in time’ are not correct,” said Kohli, widely considered as father of Indian IT industry.

“At no point at that time was there ever an intention of the Tata Group to sell TCS to IBM,” he said in a statement.

Mistry claimed yesterday that Ratan Tata had put before JRD Tata a proposal to sell TCS to IBM. The ousted chairman said Kohli’s illness during the period prevented any progress on the matter.

Without specifying the period, Mistry claimed Ratan Tata was the joint managing director of a joint venture between Tata group and IBM when this offer was made.

Terming it as a “near death experience” for TCS, Mistry said, “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.”

Kohli today said he underwent a bypass surgery in 1984, while the joint venture was started in 1991-92.

“I was actively involved in the decision to bring IBM to India. A JV for hardware manufacturing and support in India, Tata IBM, was set up in 1991-92. This JV was undertaken to promote computer hardware industry in India which was non-existent at that time,” Kohli said in the statement.

According to media reports, the JV was dissolved in 1999.

Kohli said JRD Tata was keeping a tab on his health and surgery and also contacted the surgeon in Houston, USA, wanting to know details of Kohli’s return to India as he wanted to discuss a business proposal.

“He (JRD) wanted to discuss Burroughs proposal for software work in India under Tata Burroughs, which might affect TCS’ business,” Kohli said.

Mistry made his allegations, purportedly, to rebut the charge of not contributing materially to the growth of TCS and JLR.

He has made frontal allegations against Tatas, particularly about the way Ratan Tata conducted business.

Kohli joined Tata Electric Companies in 1951. He was the first chief executive of the 1968-incorporated TCS, now the crown jewel of the over USD 100 billion group, and retired from the company in 2000.

Corus good decision, says Muthuraman

In a strong rebuttal to ousted Tata Group Chairman Cyrus Mistry, former vice chairman and MD of Tata Steel B Muthuraman today said buying Corus was a well thought out decision and the acquisition price was only 50 million pounds higher than the next bidder.

Amid the ongoing war of words with Tatas since his ouster last month, Mistry had claimed yesterday that Ratan Tata’s “ego” led to “overpayment” for UK steelmaker Corus.

Muthuraman, who was the head of Tata Steel when the acquisition was made in early 2007, rubbished the remarks as “frivolous and unconsidered comments”, saying he was surprised and very sad at “the speculative and biased views”.

Mistry had stated that some board members had reservation to Ratan Tata pushing for the acquisition of Corus for more than USD 12 billion, as a year earlier it was available at half that price.

“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,” Muthuraman said in a statement.

Giving reasons for the acquisition, he said following the successful acquisition of NatSteel in Singapore and Millennium Steel in Thailand, Corus Group plc provided “a natural fit for the portfolio especially since the Netherlands facilities which is the gold standard in competitive positioning were part of the asset perimeter”.

The Board of Tata Steel, he said, was “deeply involved” in all the deliberations and approved the transaction.

“The value of Corus increased since the initial bid in line with the commodity price boom, its underlying performance and the transaction process,” he said, adding that the acquisition was through a transparent auction process managed by the takeover regulator in the UK.

The price paid by Tata was just “50 million pounds higher than the next bidder”, he said.

In the first two years of the acquisition itself, Corus had an average annual EBIDTA of over 1 billion pounds which justified the reasonableness of the acquisition.

But the sudden and unprecedented scale of the global financial crisis in 2008 had “a very significant adverse impact on the industry fundamentals in Europe which also impacted the performance of Corus”, he added.

Tata Steel also came out with a strongly worded statement dismissing as “unsubstantiated” allegations about Corus acquisition saying the transaction was extensively deliberated and approved by the company board.

“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,” it said.

Like this report? Sign up for our daily newsletter to get our top reports.


Leave Your Comment
Cyrus Mistry fires another salvo, says Ratan Tata tried to sell TCS

Cyrus Mistry fires another salvo, says Ratan Tata tried to sell TCS

PTI 1 year ago
Hitting back at Tatas, ousted Chairman Cyrus Mistry today rejected charges of...
Tata-Mistry controversy — all that we know so far

Tata-Mistry controversy — all that we know so far

Aman Malik 1 year ago
On 24 October, the Tata group removed Cyrus Mistry as chairman, a move that took...
TCS chief N Chandrasekaran to be new Tata Sons chairman

TCS chief N Chandrasekaran to be new Tata Sons chairman

TEAM VCC 11 months ago
Tata Sons Ltd on Thursday named Natarajan Chandrasekaran, a group veteran and...
No Comments

Former TCS chief, Tata Steel MD rebuff Cyrus Mistry’s allegations

Powered by WordPress.com VIP