Cyrus Mistry must avoid frivolous, unconsidered comments on Corus buy: B Muthuraman, former Tata Steel MD

MUMBAI: Former Tata Steel managing director B Muthuraman on Wednesday refuted Cyrus Mistry’s allegations of misgovernance and poor decision making by the Tata Group while acquiring Corus almost a decade ago.

Tata Steel, too, put out a statement dismissing allegations levelled by Mistry, who remains the company’s chairman even after his ouster as group chairman, saying the decision was based on long-term strategy to pursue growth through international expansion and enhance the portfolio of value-added products.

“I am surprised and very sad to see the speculative and biased views being fed in the media regarding the acquisition of Corus nearly a decade back in early 2007,” said Muthuraman who headed Tata Steel at that time. “The longtermstrategy 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 said.

He said Mistry must avoid making frivolous, unconsidered comments.

Mistry had on Tuesday alleged that then chairman Ratan Tata decided to buy Corus for more than $12 billion despite reservations raised by some board members and senior executives. Mistry had also alleged that Corus’ expensive buy in 2007 was a result of Tata’s ego, and that the over payment made it harder to invest in the asset, placing many jobs at risk.
Muthuraman claimed that following the successful acquisition of NatSteel in Singapore and Millennium Steel in Thailand, Corus Group provided a natural fit for Tata Steel’s portfolio. He said the company board was deeply involved in all the deliberations and had approved the transaction.

Tata bought Corus in 2007 at the peak of commodity cycle for $12.1 billion, one of the largest overseas acquisitions by an Indian company at the time. Efforts to turn around the business and make profits have failed so far.

Tata Steel, too, said the acquisition was under the supervision of the company board. “The performance of Corus post acquisition validated the strategy till the black swan event of the global financial crisis structurally impacted the underlying demand conditions in Europe, causing financial hardship to the entire industry,” it said.
Mistry’s office on Wednesday said 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,” it said.

Tata Steel in March, under the chairmanship of Mistry, had decided to sell or restructure its poorly-performing UK steel business as the financial performance of its UK arm had deteriorated substantially in the last 12 months.