Former chairman of Tata Sons, Cyrus Mistry had asked all the Tata group CEOs in October 2013 to cease all business relations with his father’s Shapoorji Pallonji group in order to avoid any conflict of interest charges against him at a later date.
A source close to the development said the SP group, which is one of India’s oldest construction companies, lost sizeable business with the Tata group cutting their business relations with them. The SP group is run by Shapoor Mistry, elder brother of Cyrus.
In his communication to the CEO’s, Mistry said the Tata group was always prided itself to adhere to the highest standards of corporate governance in India for over a century. “In adherence to the same philosophy, and to avoid perception of a potential conflict of interest, I believe that as long as I am the Executive Chairman, it would be appropriate that the Tata group of companies no longer engage with the Shapoorji Pallonji group for any engineering and construction contracts,” said Mistry.
The current contracts can continue till its expiry, Mistry had said asking his letter to be placed before the respective companies’ board and implemented across group companies.
An email sent to the Tata group and the SP group did not elicit any response.
Analysts said the letter shows Mistry indeed followed standards of corporate governance so that it should not create any controversies at a later date. The SP group earns $4 billion in revenues each year and Cyrus’s father Pallonji Mistry’s wealth is estimated at $14.5 billion based on his holding in Tata Sons and in his own group.