Chandrasekaran defends Corus Steel acquisition, trashes Mistry's charges

He said the board of directors have acted in the company's best interests at the Tata Steel AGM

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.

Addressing the 110th annual general meeting (AGM) here, Chandrasekaran said 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.

Tata Sons former chairman Cyrus Mistry had raised issues regarding acquisition of Corus.

Chandrasekaran said the international growth strategy was to focus on accessing new markets, sourcing raw materials, enhancing the technology capability and developing high-end premium products.

"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.

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 acquisition of Corus was effective April 2007.

In the first financial year after the acquisition, the EBITDA of Tata Steel UK, the SPV which acquired Corus, was British pound (GBP) 1,038 million, compared to GBP 687 million in the previous year.

"This performance justified the reasonableness of the acquisition," he said.

The sudden and unprecedented scale of the global financial crisis in 2008 had a very significant negative impact on the industry fundamentals in Europe which has also impacted the performance of Corus.

"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.

The board of directors have always acted in the best interest of the company and will continue to do so in the future, he said.

The company has a professional and competent leadership team for the management of the business, Chandrasekaran told shareholders.

He informed that in less than a month Ishaat Hussain and Andrew Robb will retire from the company's board.