Tatas to lose more if business ties are snapped: SP Group
MUMBAI: The Shapoorji Pallonji (SP) group gives more business to the Tata Group of companies. 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 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 thousands of crore. It said almost 50 firms of the SP Group will be affected by the Tata Sons board’s decision taken on 9 August. All Tata companies are said to beactingon the TataSons directive, which came to them on August 14, 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 $5 billion private held SP group has interests ranging from construction to shipping. Last year, it bought automobiles and steel, among other things, from various Tat a group firms, said the SP group spokesperson. He said valueof thesteel order alonewas “in excess of ₹400 crore” and bought at least 150 heavy commercial vehicles from Tata Motors over 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 ₹50 crore annually,” he said.
“Th eSP Group believes intaking business decisions unemotionally, in the best interests of stakeholders and will evaluate every business opportunity on merits,” he said in response to whether the group will look at scrapping ties with Tata firms.
In a separate statement, th eSP group also refuted allegations of conflict of interest. Former Tata Sons Ltd chairman Cyrus Mis try in November 2013 directed all group companies to stop awarding new engineering and construction contracts to his familyrun 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 have been engaged in courtroom battles since October when Cyrus Mistry was ousted as the chairman of the Tata holding firm ina boardroom puts ch. The Mistry family firms—Cyrus Investments Pvt. Ltd and Sterling Investments Pvt Ltd—own 18.4% of ordinary shares in Tata Sons.