Tata Group to end all biz dealings with Cyrus Mistry's SP Group: Report

Ousted Tata Sons Chairman Cyrus Mistry. File photo
Under Chairman N Chandrasekaran, Tata Sons' board has directed its group companies to put an end to all their business dealings with Cyrus and Shapoor Mistry’s SP Group, putting transactions worth several hundred crores at risk, reported the Economic Times on Thursday. 

According to the financial daily, close to 50 companies of the SP Group, which holds about 18.4 per cent in Tata Sons, will be affected by the decision taken on August 9. The report added that Cyrus Mistry and his elder brother, Shapoor Mistry, each own half of the privately-owned SP Group. 

The directive, the report said, has been sent to all of Tata Sons' group companies, including Tata Steel, Tata Power, Tata Chemicals, Tata Motors, Voltas, and Trent. According to the financial daily, the SP group companies that will be affected by this directive include Afcons Infrastructure, Eureka Forbes, and Forbes and Company Ltd. 

The reason for this directive, according to an unnamed Tata Group source cited by the report, is the 'disparaging' statements made by Cyrus Mistry and his associates against Tata Sons. The source added that the Group believes that these statements were made with the intention of casting it in a 'negative light'. Further, according to the report, the directive stated that the SP Group had helped Mistry in his "hostile approach" against the Tata Group. 

Earlier this month, major Tata group firms, including Tata Motors, Tata Steel, and Indian Hotels, denied allegations of breach of corporate governance norms levelled by Cyrus Mistry, who was ousted as the Tata Sons chairman in October last year, through their annual reports. According to agency reports, the companies had said that Mistry's allegations were incorrect and made without exercising proper care. 

Mistry had cited specific instances pertaining to different companies to raise ethics and corporate governance lapses. 

As reported earlier, the Securities and Exchange Board of India (Sebi) has not seen much merit in the allegations made by Mistry against Tata group flagship companies and Chairman Emeritus Ratan Tata. After his ouster, Mistry had shot a letter to Sebi flagging various lapses at Tata group listed companies. 

Here are Mistry's allegations:

1) Mistry has said that the agenda of board meetings and other sensitive information pertaining to board and committee meetings were being shared with Ratan Tata, who no longer had a full-time role in various Tata group listed companies. This, Mistry had said, raised the risk of violation of Sebi's insider trading regulations. 

2) Mistry had raised questions over major commercial decisions taken by the boards of various Tata group companies. Some of these include Tata Power's decision to bid aggressively for the Mundra Project, Tata Motors' Tata Nano project, losses incurred by Indian Hotels and Tata Steel on overseas operations. Sebi had asked the audit committees of each of the companies to study the allegations. 

3) It was alleged that independent director Nusli Wadia was unfairly removed from the board of Tata Steel, Tata Chemicals, and Tata Motors for supporting Mistry.

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