Snapping ties will hurt Tatas more than us, says Shapoorji
18 Aug 2017
The Shapoorji Pallonji (SP) Group today said it gives more business to the Tata group of companies than it gets from the latter, and any step to snap business ties would hurt the Tatas rather than the SP Group.
''Tata Sons instructing independently listed companies to take this step has locked out a significant consumer of its products - an act that is detrimental not to the SP Group but to the interests of the Tata Group companies,'' said a Shapoorji Pallonji spokesperson in a texted message.
A Tata Sons spokesperson declined to comment.
On Thursday, it was reported that the board of Tata Sons, chaired by N Chandrasekaran, had ordered its group companies to sever all business ties with sacked chairman Cyrus Mistry and Shapoor Mistry's Shapoorji Pallonji Group (See: Tata asks group firms to cut all ties with Mistry's group).
According to The Economic Times, almost 50 companies of the SP Group would be affected by the Tata Sons board's decision, taken on 9 August. All Tata group companies are said to be acting on the Tata Sons directive, which came to them on 14 August, the ET said.
The privately held SP Group, which had $5 billion in revenue in 2016, has interests ranging from construction to shipping. Last year, it procured steel worth more than Rs400 crore from Tata Steel Ltd, the spokesperson said, adding that it has also been a large buyer of heavy commercial vehicles from Tata Motors Ltd, procuring more than 150 vehicles from it in the last three years.
On the other hand, the ''total commercial engagement in O&M (operation and maintenance) and supply contracts with SP Group companies namely Eureka Forbes and Sterling Wilson from the Tata Group does not exceed Rs50 crore annually,'' he said.
''The SP Group believes in taking business decisions unemotionally, in the best interests of stakeholders, and will evaluate every business opportunity on merits,'' he said when asked whether the group will look at scrapping ties with Tata Group firms.
In a separate statement, the SP Group also refuted allegations of conflict of interest. As Tata Sons chairman, Cyrus Mistry in November 2013 had directed all group companies to stop awarding new engineering and construction contracts to his family-run SP Goup to avoid conflict of interest, Mistry had said on Thursday.
As a result, orders from the Tata group fell from Rs1,125 crore in 2012-13 to zero in 2015-16, SP said in a statement. ''Any residual orders pending are extremely insignificant in value for the SP Group,'' it added.
The Mistry family and Tata Sons, which share a five-decade old association, have been engaged in courtroom battles since October last year when Cyrus Mistry was ousted as the chairman of the Tata Group holding firm.
Among other things, Tata Sons cited ''breach of trust'' and the board's ''loss of faith'' in Mistry as reasons for suddenly removing him from the job.
Mistry family firms - Cyrus Investments Pvt Ltd and Sterling Investments Pvt. Ltd - own 18.4 per cent of ordinary shares in Tata Sons.