Tata Steel Chairman N Chandrasekaran on Tuesday defended the acquisition of Corus Steel in the UK and said all allegations were incorrect as the decision was one of the long-term strategies to grow through international acquisitions, a report by financial daily Economic Times (ET) said.
Former Tata Sons chairman Cyrus Mistry had alleged that Ratan Tata decided to buy UK-based Corus for more than $12 billion despite reservations raised by some board members and senior executives.
Addressing the 110th annual general meeting (AGM) of the company here, Chandrasekaran said that during the second half of the previous fiscal, the company had faced challenges owing to leadership change at Tata Sons.
"During this period, certain specific issues relating to acquisition of Corus were raised. It is now evident that such allegations were incorrect," he said in the ET report, in response to allegations on the Corus acquisition.
Chandrasekaran said this was done through a transparent auction process which was a sound business decision at that time – nobody could have predicted the global financial crisis and subsequent slump in the commodities market.
"The Board was deeply involved in all the deliberations on Corus that took place over multiple board meetings and had approved the acquisition of Corus on a consensus basis," Chandrasekaran was quoted by ET as saying.
Financial news portal Moneycontrol.com reported Chandrasekaran as saying that all communications with Tata Sons were in line with the requisite corporate governance processes.
The value of Corus increased since the initial bid, in line with the commodity price boom, its underlying performance and the transaction process.
The acquisition was through a transparent auction process managed by the takeover regulator in the UK and the acquisition price per share was 5 pence higher than the next bidder, he said. "The Board was deeply involved in all the deliberations on Corus that took place over multiple board meetings and had approved the acquisition of Corus on a consensus basis," Chandrasekaran said.
He expressed optimism on the Indian steel market this year as compared to last year. The UK steel market may face near term challenges, but the US and India markets will perform well, Chandrasekaran added.
He said the international growth strategy is to focus on accessing new markets, sourcing raw materials, enhancing the technology capability and developing high-end premium products.
He further added that rollout of the Goods and Services Tax (GST) would boost the GDP growth as it simplifies tax regime for the company, Moneycontrol reported.
Tata Steel's domestic capacity is likely to increase to 12.75 million tonnes this year with the ramp-up of the Kalinganagar plant. The company would focus on the specialised products in India and Europe.
"Following the successful acquisition of NatSteel in Singapore and Millennium Steel in Thailand, Corus Group Plc provided a natural fit for the international portfolio including the identified synergies," he told shareholders.
Restructuring of the UK business and reduction of the debt will be the key focus areas for the company. The UK business restructuring and discussion over the British Steel Pension Scheme are likely to be completed soon.