 "Tata Steel director blames Ratan, not Cyrus, for European unit mess")
Former Tata Sons chairman Cyrus Mistry had kept Ratan Tata, then chairman emeritus and current interim chairman, in the loop about the sale of sagging European operations, a director on the board said.
“The decision to disinvest 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,” said the director, who did not want to be named.
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’s 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.
In 2007, Tata Steel had acquired Corus Steel for $12-billion. But, due to the 2008 financial crisis and later the commodity crash and cheap Chinese exports, the operations became unprofitable.
Since Mistry became the chairman, the group was struggling to sell its British operations, losing close to a million pounds a day. An e-mail sent to the Tata group did not elicit any response.
On October 24, Mistry was unceremoniously removed as the chairman of Tata Sons and was replaced by the 79-year-old Ratan Tata.
While an official statement from the Tatas did not give any reasons for Mistry’s ouster, insiders blamed under-performance and cited the European operations of Tata Steel as a prime example of his bad performance.
The director said since Tata was chairman emeritus of Tata Steel and got the same agenda that every director got, he should have intervened earlier. “He was copied on every mail that we all received. So, what stopped him from reacting then and why blame Cyrus?” the director asked.
The director said in the last few years, the directors had been warning in almost all board meetings to get out of Europe. “Even when Tata was the chairman, we told him to get out (of Europe). But, it was Tata who was not willing to get out,” the director 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,” said he.
When asked whether Tata Steel would remove Mistry in the next board meeting, the director said it was not easy to remove Mistry as chairman as he was appointed by the board and not by the shareholders.
“Second, Mistry has not taken decisions on his own. He had consulted Tata Sons’ board and made presentations on Tata Steel to N A Soonawala and Tata on exit strategy. This is extremely unfair and unjust to single him out and hang everything on his head,” said he.
However, industry source said it was a norm that the Tata Sons chairman takes over as the chairman of group companies as well.
