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 investing 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 write-downs 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.Shoot