Ratan Tata saving British Steel at the cost of Tata Steel India: Nusli

MUMBAI: In his first letter to Tata Steel shareholders defending his position as an independent director,

Nusli Wadia

attacked Ratan Tata for `destroying' the tradition built by JRD Tata and working to save

British Steel

.

Wadia argued that Tata Steel was set up by Tata Group founder Jamshetji Tata to fight British Steel. “Ratan Tata is trying to save British Steel (

Corus Tata Steel Europe

) by deploying huge resources at the cost of Tata Steel India.“ Wadia emphasised that he had differed strongly with Ratan Tata regarding the buyout of

Corus

, as his view was that Tata Steel was best served by expanding in India.

Wadia said he had also differed strongly in providing continuous financial resources to Corus since 2012. “From that date to now, the capital employed in the business has risen by about Rs 25,000 crore with nil return,“ he wrote. As a result, Tata Steel has lost its premier position in India.

Wadia believes that the situation in Corus is likely to further deteriorate and impair Tata Steel's Indian operations. “It is not the role of your company to save jobs in the UK nor to support its pension funds. The role of your board is to apply your funds to the most profitable growth opportunities...better served by in vesting in India where the returns are better.“

Wadia believes that any return on investment to shareholders of Tata Steel from its investment in Corus looks “a near impossibility“. “The shareholders of Tata Steel have already suffered a serious impairment of about Rs 35,000 crore and are likely to have further writedowns in the future,“ he said. The letter from Wadia, who has been on the board of Tata Steel for 37 years, was in response to Tata Sons, under interim chairman Ratan Tata, sending a notice to the steel maker's shareholders to remove Wadia from the board. The shareholders' meet is scheduled for December 21.

Wadia pointed out that the name Tata in `Tata Steel' was given to it by its founders and not Tata Sons. This name was attached much before Tata Sons was incorporated. “The products of the company have been sold since 1907 under the brand name `Tata' almost 91 years before any licence agreement with Tata Sons was entered into by the company that too without a payment of any fee. It is only from 1998 that Tata Steel entered into a licensing agreement with Tata Sons, the validity of which needs to be examined and suitably addressed,“ he said.

Wadia said that no financial support was given by

Tata Sons to Tata Steel

, including for the acquisition and continuation of the investment in Corus or otherwise.

Wadia also questioned the locus standi of Kumar Bhattacharyya, a friend of Ratan Tata, who has been giving statements relating to Tata Steel's UK operations in the past and even now although he is neither a director on the board nor an employee of Tata Steel or its subsidiaries. Wadia questioned if such interventions by Bhattacharyya, who is part of the panel to search the next Tata Sons chairman, was in contravention of law.

Wadia cited an instance that occured on the evening of November 24, before Mistry's removal as chairman of Tata Steel and also prior to the board meeting on the same day . He sa id British newspapers quoted Bhattacharyya as saying that the Tata group was preparing “major announcements about growth in Tata Steel“, and was “resolving“ the problems facing the business. “The question that now arises is in what capacity did Bhattacharyya make these statements and with whose authority did he commit your company , make announcements to the UK Parliament and the UK Public,“ Wadia wrote.

Wadia dismissed allegations by Tata Sons that he has been acting against the interests of the Tata Group. “I do not serve the Tata Group in any capacity and am not required to act in their interest. I have a fiduciary responsibility to act as an independent director in the best interest of the companies on whose boards I serve, no more no less,“ he wrote.

Wadia urged Tata Steel shareholders to decide not on the fate of him as an independent director of Tata Steel, “but on the fate of the very institution of independent director“. He said that this was the first time in India that a resolution is being proposed to remove an independent director. “I am before you today because I chose to discharge my duty as an independent director honestly , faithfully to the best of my abilities as a fiduciary in the interest of all stakeholders. I did not toe the line of one particular shareholder,“ he said.