Four years after riding into the sunset, Ratan Tata is back
with a message for the incumbent Chairman, Cyrus Mistry and Tata Steel
shareholders: “Tough Love”.
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| In Happier times |
He has succeeded in getting the board of directors
to fire Cyrus Mistry barely four years into his job. Cyrus Mistry was at the forefront of efforts to enter into JV
with Thyssenkrupp and negotiate pension plans with the UK Government which would have saved thousands of jobs and pensions.
The
Chinese onslaught of dumping steel has bled Tata Steel and they have been
forced to write off almost $3bn of the $13bn purchase price.
Ever since Ratan Tata acquired Corus for $13bn at the height
of the commodity boom, the business was doomed to fail. Having a write off of
nearly $600mn in the very next year of acquisition is certainly an ominous sign.
Instead of hiving off the business, Mr. Tata continued with his priced
acquisition. Subsequent years saw steel prices crash and alongwith it the high
pedestal upon which Mr. Tata placed himself upon. A person of the calibre of
Mr. Tata should have been aware that he was riding the very peak of the commodity
wave when he bought Corus in a bidding war.
Last 10 years has seen Tata Steel underperforming the BSE Sensex by 140% and giving an absolute return of -18.94%.
Known for his fights against the old guard at the House of
Tatas, Mr. Ratan Tata himself has turned old guard. It is anyone’s guess who
the new chairman would be accountable to. Most certainly not to the
shareholders.
Meanwhile the fate of thousands of workers and investors in
Tata Steel hang in balance. Tough love.
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