Ratan Tata advised JRD Tata to sell off TCS to IBM When FC Kohli had suffered a heart attack
Moneylife Digital Team 22 November 2016
When FC Kohli, the founding chief executive of Tata Consultancy Services (TCS) suffered his first cardiac attack, Ratan Tata proposed to JRD Tata that they should sell the company to IBM, reveals the statement released by the office of Cyrus P Mistry. Mr Kohli, however, has refuted the allegations.
 
"When one talks about vision and near death experiences, it is worth recounting a little known fact. Midway during the TCS journey to date, Mr FC Kohli was suffering from a cardiac condition. Mr Ratan Tata was then heading Tata Industries’ joint venture with IBM and approached Mr JRD Tata with a proposal from IBM to buyout TCS. Mr JRD Tata refused to discuss the deal because Mr FC Kohli was still recovering in the hospital from his setback. On his return, Mr Kohli assured JRD that TCS had a bright future and the group should not sell the company. JRD Tata turned down the offer, demonstrating true vision. But, it was also a near death experience for TCS at the hands of Mr Ratan Tata," the statement says.
 
Calling FC Kohli as visionary founding CEO of TCS, the office of Mr Mistry praises N Chandrasekaran, the incumbent chief, calling him to continue to provide 'strong and able leadership' to the company. The statement says, "Chandra, his leadership team, and the nearly 350,000 TCS employees have made us proud. Over the last four years, the TCS leadership team has engaged well, and complemented, the Board. In his role as non-executive Chairman, Mr. Mistry’s primary involvement with TCS has been focused on future-proofing TCS strategy and helping fortify their relationships at the C Suite level by leveraging the strength of the Tata Group."
 
Here is what the statement issued by Mr Mistry's office says about TCS...
 
The high dependence on TCS in the Tata Sons portfolio is a well-known fact. This was repeatedly flagged in strategy presentations to the Tata Sons Board by Mr. Mistry. Apart from strengthening other group companies, Mr. Mistry maintained that keeping TCS strong and relevant is critical.
 
For TCS to flourish, it was vital that TCS transformed from an IT solutions provider to a strategic partner because the digital imperative had become a strategic differentiator for many organizations. Consequently, the client relationship needed to move from engaging with the CIO (with whom traditionally Indian IT company CEOs maintained their relationship) to the CEO. As
Chairman of Tata Sons and Tata Consultancy Services, Mr. Mistry’s access to senior stakeholders across the world was an enabling platform. Over the last 3 years, Mr. Mistry met at least 60 global CEOs, some along with TCS leadership, to reinforce the capabilities of TCS for organizations to co-innovate in the digital world. 
 
The results of TCS over the past 3 years when examined with respect to the profile of clients demonstrates the power of this strategy (see Table).
 
 
Just last year, TCS had undertaken one of the largest skill upgradation programs in corporate history. Over 135,000 people have been trained to be ready for the new digital world. TCS joint venture in Japan and industry leading growth in Europe are all part of a longer term strategy to ensure resilience. A more globally balanced portfolio of business makes TCS robust by hedging against ongoing geo political risk.
 
Several opportunities lie ahead. The board and the management explored cyber security, health, bio informatics and deep learning. Acquisition of companies with capabilities in these spaces and others required TCS to have available a reservoir of cash. Hence, one of the first items for Mr. Mistry on his joining the TCS Board was to focus the management on reducing the gap between profits and cash. Mr Chandrasekaran and his team responded splendidly, improving the cash conversion cycle from 49% in 2012 to 92% in 2015. The improved performance enabled TCS to declare a special dividend without compromising firepower for acquisitions. Cash and cash equivalents doubled over the same period to Rs. 20,500 crores. 
 
Over the past 3 years, Mr. Mistry attended TCS customer summits in USA and Europe. In addition, he engaged with employees at TCS centres located in Pune, Chennai, Bengaluru, Hyderabad, and the USA. In the past three months, he engaged with the TCS’s Innovation and Design Centre at Santa Clara, USA, reviewed the TCS health care partnership with the University of California, Berkeley, and worked with the TCS Canada leadership team in Toronto. Mr. Mistry was supposed to spend two days in late November with the TCS Japan team to attend their customer summit in Japan and help emphasize the Tata Group’s long term commitment to Japan.
 
Based on his many touch points with the company’s stakeholders, the TCS leadership team, and his interactions with the young associates, Mr. Mistry is confident that the best is yet to come for TCS.
 
UPDATED: Kohli denies talks to sell TCS to IBM
According to media reports, Mr Kohli refuted the allegations made by Mr Mistry on selling TCS to IBM. Quoting Mr Kohli, a report from Economic Times, says, "He (JRD Tata) wanted to know when I would be well enough to return to India. He wanted to discuss the Burroughs proposal for software work in India under Tata Burroughs, which might affect TCS' business."

“Cyrus Mistry’s comments regarding the sale of TCS to IBM at some ‘unspecified point in time’ are not correct. I was actively involved in the decision to bring IBM to India. A joint venture (JV) for hardware manufacturing and support in India, Tata IBM, was set up in 1991-92. This JV was undertaken to promote the computer hardware industry in India, which was non-existent at that time,” Mr Kohli was quoted as saying in a report from Business Standard.
Comments
ramchandran vishwanathan
5 years ago
Mr.Mistry seems to have his priorities right. The table above is an indication of the same.
Debadatta Das
5 years ago
The first and foremost thing is that whether they are Tata or Narayan Murthy, once you people retired from the chairmanship don't think about your legacy. You may be the founder and the company is your baby but the fact is someone else has to succeed. Yes.. you may act up to the capacity as a shareholder and not beyond that.
Chandrahas Dayal
5 years ago
It appears that Mr. Mistry showed tremendous foresight and involvement of the right kind as TCD non-executive chairman. Truly exemplary.
Chandrahas Dayal
Replied to Chandrahas Dayal comment 5 years ago
I mean TCS and not TCD.
Free Helpline
Legal Credit
Feedback