A day after ousted Tata Sons chairman Cyrus Mistry made the shocking revelation that Ratan Tata had tried to sell Tata Consultancy Services (TCS) to IBM, FC Kohli, former CEO and deputy chairman of TCS, countered Mistry’s statement saying it was not true. On Wednesday, Kohli, together with former Tata Steel CEO B Muthuraman, hit back at Mistry who had alleged Tata’s “ego” had led to bad business decisions like acquiring Corus for $12 billion and opting for CDMA technology over GSM in the telecom segment. The attack on Mistry was bolstered with Tata Motors convening an extraordinary general meeting (EGM) on December 22 to consider Tata Sons’ proposal to remove Mistry and Nusli Wadia as directors from the company’s board.
The office of Cyrus Mistry responded late in the evening stating that he would not like to join issues with Kohli and agrees with him that the group did not intend to sell TCS, it was just Ratan Tata’s intention to sell. However, Mistry stuck to his statement on Corus, stating that while the final decision was unanimous it came after differences and reservations, and that the price was high is an undisputed fact.
“Mr Mistry has the greatest respect for Mr Kohli and does not wish to join issue with him on the statement that he has made. Mr Mistry agrees with him 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,” the statement from Mistry’s office said.
The response was to Kohli’s statement that said at no point had the Tata Group contemplated selling TCS to the American giant.
“Mr Cyrus Mistry’s comments regarding the sale of TCS to IBM at some ‘unspecified point in time’ are not correct,” Kohli stated. He added that during the time period Mistry had referred to, JRD Tata had only discussed TCS’ business with him. “Mistry’s comments regarding the sale of TCS to IBM at some ‘unspecified point in time’ are not correct. He wanted to discuss Burroughs proposal for software work in India under Tata Burroughs, which might affect TCS’ business,” Kohli said.
Kohli said that 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,” he added.
After Kohli, another Tata veteran Muthuraman rubbished Mistry’s claim that Ratan Tata’s ego had led to the expensive acquisition of Corus in 200, claiming that it was part of Tata Steel’s long-term overseas inorganic growth strategy, which the company’s entire board approved of. “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,” he stated, adding that the troubles that followed the acquisition had more to do with the global financial crisis than anything else.
“The over-payment for Corus made it harder to invest in it, which had been neglected, and thereby, placed many jobs at risk,” a statement from Mistry’s office had said on Tuesday, claiming that the acquisition was a case of “one man’s ego versus an institution” since some board members were not in favour of it. Seconding its former MD and vice-chairman, even Tata Steel issued a statement on Wednesday attributing the company’s post-Corus acquisition problems to the “black swan event of the global financial crisis”.
The response from Mistry’s office on Wednesday was, “Mr Mistry 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””
Late in the evening, Tata Motors informed the exchanges its board had decided to convene an EGM on December 22 to remove Wadia and Mistry as directors of the company. This follows the board of TCS convening an EGM on December 13 and that of Indian Hotels on December 20 to remove them from their respective boards. Mistry has, so far, already been replaced as the chairman of TCS and Tata Global Beverages, which followed his sudden unceremonious removal as the chairman of Tata Sons on October 24 on charges of under-performance and not having kept in mind the ethos of the Tata Group.