Mumbai: Ratan Tata once tried to sell Tata Consultancy Services Ltd (TCS), now the cash cow of the Tata group, to International Business Machines Corp. (IBM), a statement from the office of Cyrus Mistry claimed on Tuesday.
The statement, which came days after Tata Sons Ltd said its ousted chairman failed to “contribute materially” to TCS, denied the allegation and said Mistry had worked to future-proof the software maker’s strategy. It also added that Mistry had been equally involved with Tata Motors Ltd’s UK luxury unit Jaguar Land Rover Automotive Plc. in its strategy meetings and design reviews.
It’s the latest in a string of claims and counter-claims Mistry and Tata Sons, the Tata group holding company, have exchanged since the former was ousted as chairman on 24 October, less than four years after he took the helm.
The statement said that Ratan Tata, who was then heading a joint venture between Tata Industries Ltd and IBM, had approached J.R.D. Tata, then chairman of Tata Sons, with a proposal from IBM to buy out TCS.
This, it said, happened when F.C.Kohli, founding father of the Indian software industry and then TCS boss, was unwell. J.R.D. Tata refused to sell TCS after Kohli assured him the company had a bright future, the statement said.
The statement didn’t specify the year in which the proposal was made or how Mistry had access to this information.
A Tata Sons spokesperson said the group companies will respond to the statement on Wednesday.
The statement by Mistry comes ahead of a special meeting of TCS shareholders on 13 December to remove him as a director. Starting next week, Mistry is expected to meet institutional investors as he builds his defence against Tata Sons’ resolution seeking his expulsion, said a person with the direct knowledge of the plans. Data such as TCS’s improving client profile and increased cash flows will likely be used to make Mistry’s case, this person said.
On 10 November, Tata Sons used its power under TCS’s articles of association to replace Mistry as chairman with Ishaat Hussain.
Mistry “focused on future-proofing TCS strategy and helping fortify their relationships at the C-Suite level by leveraging the strength of the Tata(s)”, his statement said.
Over the past three years, Mistry has met at least 60 global chief executives, some along with the TCS leadership, to reinforce the software maker’s capabilities, it claimed.
After joining the board, Mistry focused on improving the firm’s cash conversion cycle. In 2012, only about half of TCS’s profits converted into cash flows; this increased to 92% in 2015, enabling the firm “to declare a special dividend without compromising firepower for acquisitions”. Cash and cash equivalents doubled over the same period to Rs20,500 crore, it said.
Mistry also attended TCS customer summits in the US and Europe and engaged with its employees. Indeed, three days before he was fired as Tata Sons chairman, Mistry was in China on TCS business, said the person quoted in the first instance.
Separately, JLR under Mistry has been able to achieve scale as well as minimize currency and supply chain risks by investing in new facilities, the statement claimed. This has been done without leveraging the balance sheet and retaining adequate liquidity, the statement added.
TCS accounted for at least 90% of the dividend payout of listed Tata group companies for the past three years.
In 2012-16, Mistry spent over 120 days including 38 days on JLR design review and 56 days on off-site strategy meetings as well as market visits to dealers in China, the US and India, said the statement said. That excludes the time he devoted to board and budget meetings, the statement said.