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Tata Steel restructuring board

Tata Steel restructuring board
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First Published: Sat, Feb 17 2007. 12 14 AM IST
Updated: Sat, Feb 17 2007. 12 14 AM IST
Mumbai: Even as big-ticket mergers and acquisitions between Indian and European companies, including Tata-Corus and Vodafone-Hutch, raise hopes for greater economic integration between two economic powers, Corus chief executive officer, 55-year-old Philippe Varin, is quickly becoming an important part in the Tata Group.
Varin is being nominated as a director of Tata Steel and will be reporting directly to company chairman Ratan Tata and not Tata Steel managing director B. Muthuraman.
Varin, who was appointed as CEO of Corus in May 2003, is credited with turning around a company that on an average, struggled to earn operating profit margins that were still six percentage points below its European peers. Through a programme called Restoring Success, he managed to achieve savings of £620 million (Rs 5,394 crore—over 98%) of a targeted £635 million by the end of 2006.
A year after completion of the $13.65 billion takeover, Varin will also be promoted deputy managing director of Tata Steel. He is expected to replace Tridibesh Mukherjee, a former Corus employee who is currently deputy managing director (steel) of Tata Steel. Mukherjee retires in October 2007 when he turns 65, the maximum retirement age for Tata Group directors.
Varin and David Lloyd, chief financial officer of the London headquartered company, have agreed to remain in employment of the combined group for at least two years, after which they will have to give a year’s notice before putting in their papers.
Varin’s induction is a part of the plan to reconstitute the 11-member board of Tata Steel, expanding it by over a third, to induct four Corus representatives. The Tata Steel management has three members on the board currently.
Corus Group Plc. chairman James W. Lang is being nominated deputy chairman and director on the Tata Steel board. Jacques Schraven, non-executive deputy chairman of Corus, will be appointed additional director on the Tata board. He is also chairman of the supervisory board of Corus Nederland BV.
The fourth new member is Anthony Hayward, a senior independent director of Corus. He too will be appointed an additional director on the Tata board. Currently, Hayward is group managing director and chief executive of exploration and production for embattled oil giant BP Plc.
Lloyd would attend the board meetings of Tata Steel as a permanent invitee, like Koushik Chatterjee, vice-president finance of Tata Steel.
Lloyd looks after corporate finance, reporting and control, mergers and acquisitions, internal audit, investor relations and shared services. Considering Tata Steel’s plans to effect savings in shared services like human resources by offshoring such functions, he will play a crucial role in the combined operations.
Corus board rejig
The Tatas are also increasing the strength of the 11-member Corus board to 12, while reducing the number of independent directors to four from the six at present. The reconstituted board will have one-third members each, from the Tata Croup, Corus and independent directors drawn from the current Corus board.
The list of independent directors who will continue to remain on the Corus board includes Jacques Schraven and Anthony Hayward.
Corus chairman Lang will step down, making way for Ratan Tata. Varin and Lloyd will be joined on the reconstituted Corus board of directors by Rauke Henstra, division director, strip products.
Other representatives will be B. Muthuraman, Ishaat Hussain, finance director of group holding company Tata Sons and a member of the Tata groups’ strategy planning wing, and Arunkumar Ramanlal Gandhi, the man who represented the Tatas at the London auction.
Gandhi, an executive director of Tata Sons, also heads the group’s mergers and acquisitions function.
Strategic planning committee
The Tatas have also constituted a seven-member strategic planning and integration committee.
Three members each of Tata Steel and Corus management will join the committee, to be headed by Tata. Muthuraman, Mukherjee and Chatterjee will represent the Tata management on the committee.
Mukherjee, deputy managing director of Tata Steel, is credited with transforming the company into a globally competitive manufacturer of steel. He is also chairman, Tata Metaliks and metaljunction.com, and director on the boards of a string of group companies. Chatterjee too is on the board of several Tata companies, including Tata Refractories,NatSteel Asia Pte. Ltd, Singapore and Southern Steel Berhad, Malaysia.
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First Published: Sat, Feb 17 2007. 12 14 AM IST
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