Tata Sons to scrap all dealings with Cyrus Mistry’s group

18/08/2017

MUMBAI: The board of Tata Sons under N Chandrasekaran has ordered its group companies to scrap all business dealings with Cyrus and Shapoor Mistry's SP Group, putting at risk transactions worth hundreds of crores of rupees.
The move is a significant step towards terminating all ties with the Shapoorji Pallonji Group and indicates that the battle between the two groups, which was ignited when Cyrus Mistry was sacked as Tata Sons chairman in October last year, is showing no signs of coming to an end. SP Group holds about 18.4% in Tata Sons.
Almost 50 companies of the SP Group will be affected by the Tata Sons board decision taken on August 9. Cyrus Mistry and elder brother Shapoor Mistry each own half of the privately-owned SP Group.
Emails sent to Tata Sons didn't elicit any response till press time. ET reviewed a copy of the letter sent to one of the Tata group companies asking it to take necessary steps to terminate all business dealings with SP Group.
A top Tata Group source said the decision to terminate all forms of business dealings, whether directly or indirectly, through contracts or sub-contracting arrangements, with the SP Group came after 'disparaging' statements made against Tata Sons by Cyrus Mistry and his associates, with the intention of casting a 'negative light' on the Tata Group.
The directive has been sent to all group companies including Tata Steel, Tata Power, Tata Chemicals and Tata Motors. Smaller group firms such as Voltas and Trent, which is chaired by Noel Tata, half-brother to Ratan Tata and brother-in-law of the Mistry brothers, have also received the order.
All Tata Group companies are said to be acting on the Tata Sons directive, which came to them on August 14.
Key SP group companies to be affected by this letter include Afcons Infrastructure, Eureka Forbes and Forbes and Company Ltd. It remains to be seen whether the SP Group will challenge the Tata Sons move in the courts.
"As the promoter and principal shareholder of your company and as the custodian of the 'Tata' brand, Tata Sons does not support any businesses dealing in any form, whether directly or indirectly, through contracts or subcontracting arrangements," the directive signed by FN Subedar, chief operating officer of Tata Sons, says. The letter says that (Cyrus) Mistry has been aided and supported by the SP Group in his "hostile approach" to the Tata Group, a key reason for the Tata group to feel aggrieved.

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