Mumbai– Contrary to the claims of Tata Sons, the operations of Tata Consultancy Services (TCS) and Jaguar Land Rover (JLR) were not on auto-pilot but were overseen by Cyrus Mistry, the ousted Chairman’s office said on Tuesday.

For the first time, Mistry, without naming any individual, said it was ego that had caused the Tata Group to suffer a huge unnecessary premia on the purchase of Corus Steel.

“The Tata Sons statement of 10th November 2016 insinuated that Cyrus Mistry had made no ‘material contributions’ to the success of TCS and JLR, which the statement implied were a manifestation of Ratan Tata’s personal vision and efforts,” the five-page statement from Mistry’s office said.

“Ideally, a leader must not need to quote such data in defence. Yet, it is important to set the record straight since insinuations and leaks are being made explicitly to create an illusion that Mistry was a ‘hands off’ Chairman and TCS/JLR were on ‘auto-pilot’ during his leadership.”

Cyrus P. Mistry
Cyrus P. Mistry

“While Tata Sons, under the leadership of Ratan Tata, is busy apportioning credit and blame for the performance of operating companies, Mistry wishes to place on record his appreciation for the hard work done by the leadership teams of those companies, who in Tata’s opinion have shown less than stellar performance — the ‘hotspots’,” the statement said.

According to the statement, Mistry as the non-executive Chairman of TCS, was primarily involved in ‘future-proofing’ the company’s strategy.

“The high dependence on TCS in the Tata Sons portfolio is a well-known fact. This was repeatedly flagged in strategy presentations to the Tata Sons Board by Mistry. Apart from strengthening other group companies, Mistry maintained that keeping TCS strong and relevant is critical,” the statement said.

The statement mentioned that TCS’s joint venture in Japan and industry leading growth in Europe are all part of a longer term strategy to ensure resilience.

“The board and the management explored cyber security, health, bio informatics and deep learning. Acquisition of companies with capabilities in these spaces and others required TCS to have available a reservoir of cash,” the statement from Mistry’s office said.

“Hence, one of the first items for Mr. Mistry on his joining the TCS Board was to focus the management on reducing the gap between profits and cash.”

On JLR, the statement elaborated that the company’s strategy under Mistry’s Chairmanship was to achieve scale as well as minimise currency and supply chain risks by investing in new facilities.

“Its lack of scale required it to invest disproportionately compared to the industry in new technologies that will help meet the regulatory requirements and differentiate its products. This has been done without leveraging the balance sheet and retaining adequate liquidity,” the statement said.

“The result is a stronger company that will reward the shareholders more consistently in the future.”

Mistry’s office further said that the Tata Gourp’s ousted Chairman was closely associated with JLR, its strategy meetings and design reviews.

“Between 2012-16, Mistry spent over 120 days including 38 days on JLR design review, 56 days on offsite strategy meetings as well as market visits to dealers in China, USA, and India. The above does not include the time devoted to board and budget meetings.”

The statement from Mistry’s office observed that ego issues had caused the Tata Group to suffer a huge unnecessary premia on the purchase of Corus Steel.

“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,” the statement said.

“The overpayment made it harder to invest in the acquired assets which had been neglected, and thereby, placed many jobs at risk.”

The statement also recalled a similar incident in which CDMA (code division multiple access) system was chosen as the platform for the group’s telecom business.

“Similarly, in November 2003, Mr. Tata, against the advice of many of his own team members, decided to back CDMA as the platform for the group’s telecom business,” the statement said.

“This ‘strategic’ decision has led to a series of consequences that currently leave the company structurally challenged. Once again, one person’s judgment adversely affected the jobs of thousands.”

Mistry’s office recounted that TCS, the industrial conglomerate’s IT bellwether, had a ‘near death experience’ at the hands of Ratan Tata.

“When one talks about vision and near death experiences, it is worth recounting a little known fact. Midway during the TCS journey to date, F.C. Kohli was suffering from a cardiac condition. Ratan Tata was then heading Tata Industries’ joint venture with IBM and approached JRD Tata with a proposal from IBM to buyout TCS,” Mistry’s office said.

“JRD Tata refused to discuss the deal because F.C. Kohli was still recovering in the hospital from his setback. On his return, Kohli assured JRD that TCS had a bright future and the group should not sell the company.”

“JRD Tata turned down the offer, demonstrating true vision. But, it was also a near-death experience for TCS at the hands of Ratan Tata.” (IANS)