Tata Sons' former chairman Cyrus Mistry on Tuesday questioned Ratan Tata's decision to buy Corus steel despite the serious reservations of some of the board members and senior executives.
A five page letter from Mistry's office read: 'It is common knowledge that the decision to acquire Corus for over USD 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."
Cyrus Mistry was not the only person who questioned Tata's most ambitious acquisition of Corus. A former business editor of The Sunday Times Ivan Fallon termed Tata's acquition of British steel giant - Corus - probably the worst deal ever done by an Indian company.
Soon after the deal, Fallon had once asked Tata as to why did he make the deal when all was not well in British steel industry. He wrote: "Shortly after he had done the deal, I asked Ratan Tata why he bought Corus. Was steel not a sunset industry, dogged by union issues, ferocious international competition and high costs?
To which Tata responded: "That was all out of date. The British steel industry after billions of pounds of state money had been poured into it, was a slim, super-efficient, highly profitable and technologically advanced industry that could take on the world."
Earlier in 2016, Tata Steel reported a consolidated net loss of Rs 3213.76 crore against a loss Rs 5674.29 crore in the year ago period. Some reports suggest that the Tata Steel's UK plant started losing pound 1m a day. Due to its constant loss, Mistry decided to wind up UK operations and sell it off. But even before Mistry could finalize the deal, he was sacked from the post of chairman by the Board of Directors of Tata Sons.
The Group also accused Mistry of not keeping other Board members in the loop while taking crucial decisions. However, a director on the board reportedly said Mistry had kept Ratan Tata in the loop about the sale of European operations.
"The decision to dis-invest in Europe was taken by the entire Tata Steel board and no one should hold Mistry alone responsible for the decision. Dozens and dozens of meetings of the board took place, including with British labour unions and British ministers, who came to Mumbai," Business Standard quoted the director as saying.
The director said Rs 70,000-80,000 crore of Tata Steel's funds had gone down the drain because of its European operations but no one was asking whether the acquisition itself was right.
"Was it Cyrus' decision (to acquire Corus)? Corus was a problem that Mistry inherited and he was just trying to clean it up. And, in the process of doing so, quite miraculously, he found Thyssenkrupp. If the merger with Thyssen goes through, then Tata Steel will be rid of Tata Steel Europe and that will save Tata Steel," he said.
When Cyrus became the chairman in December 2012, the board finally put its foot down. "We told him clearly that Corus is bleeding and it would kill the parent. We were short of resources for Kalinganagar (the Odisha units). The Indian company was pumping in huge amounts of money in Corus. And, the losses at Tata Steel were rising mainly due to Europe. You can't blame Cyrus for this. As per me, Cyrus has done a great job," he said.
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