Home >Companies >News >Shapoorji Pallonji Group says Tata group loses more if business ties snapped

Mumbai: The Shapoorji Pallonji (SP) Group said it gives more business to  the Tata group of companies than it gets from the latter. Any step to snap business ties is detrimental, not to the SP Group, but to the interests of the Tatas, said a Shapoorji Pallonji spokesperson.

On Thursday, the Economic Times reported that the Tata Sons Ltd board, under the leadership of N. Chandrasekaran, has directed group firms to snap all business ties with the SP Group. The move, the newspaper added, will lead to a loss of business worth hundreds of crore. It said almost 50 companies of the SP Group will 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 report said.

“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 the  spokesperson in a texted response.

A Tata Sons spokesperson declined to comment.

The privately held SP Group, which had $5 billion in revenue in 2016, has interests ranging from construction to shipping. Last year, SP Group procured steel in excess of 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 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. Former Tata Sons chairman Cyrus Mistry in November 2013 directed all group companies to stop awarding new engineering and construction contracts to his family-run SP Goup, the latter 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 is 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 in a boardroom putsch. Mistry family firms—Cyrus Investments Pvt. Ltd and Sterling Investments Pvt. Ltd—own 18.4% of ordinary shares in Tata Sons.

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 top job.

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