TCS had a near-death experience at the hands of Ratan Tata: Mistry

Cyrus Mistry on Tuesday said Tata group crown jewel Tata Consultancy Services (TCS) had a near-death experience at the hands of Ratan Tata. The ousted Chairman also blamed Ratan’s ego for many of the ills dogging group companies.

In a statement titled ‘Ratan Tata takes credit, Cyrus Mistry shares credit’, Mistry’s office said that many years earlier, TCS’ founder and first CEO FC Kohli had been hospitalised with a cardiac condition. At the time Ratan, then heading Tata Industries’ joint venture with IBM, had 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. On his return, Kohli assured JRD that TCS had a bright future and that 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.”

The statement also said that it was common knowledge that the decision to acquire Corus for over $12 billion, when it was going for less than half that price only a year earlier, “was based on one man’s ego and against the reservations of some board members and senior executives. The overpayment made it harder to invest in the acquired assets, which had been neglected, and thereby, placed many jobs at risk. “Similarly, in November 2003, Tata, against the advice of many of his own team members, decided to back CDMA as the platform for the group’s telecom business. 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 said.

The statement was issued in response to a Tata Sons statement that “insinuated” that Mistry had made no “material contributions” to the success of TCS and JLR. It outlined Mistry’s contributions to the growth of the two companies. For instance, it said, the number of TCS clients billing $100 million or more has grown from 8 in 2011 to 37 in 2016. It said Mistry had got the management to focus “on reducing the gap between profits and cash. Mr. Chandrasekaran (CEO) and his team responded splendidly, improving the cash conversion cycle from 49 per cent in 2012 to 92 per cent in 2015. The improved performance enabled TCS to declare a special dividend without compromising firepower for acquisitions. Cash and cash equivalents doubled over the same period to ₹20,500 crore.”

Mistry’s office noted that he had also been closely associated with JLR, its strategy meetings and design reviews. Between 2012-16, he 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, the US, and India, it said.

Meanwhile, Tata Chemicals has called an Extraordinary General Meeting on December 23 to seek shareholder approval for the removal of Mistry and Nusli Wadia as directors of the company.

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