Tata orders to Pallonji drop to zero from Rs 1,124 crore in 3 years

MUMBAI: The iconic Taj Mahal hotel in Mumbai, Tata Motors' Nano plant in Sanand, Gujarat, and TCS' campus in Hinjewadi, Pune have one factor in common: They were all built by the Shapoorji Pallonjis. But that was before the scion of the Shapoorji Pallonji Group, Cyrus Mistry , became chairman of Tata Sons in December 2012. Since then, business from the Tata Group has dwindled.

Orders bagged by Shapoorji Pallonji Group from the Tatas plummeted from Rs 1,124 crore in 2012-13 to nil in 2015-16, following a directive from Mistry after he became chairman of Tata Sons, the holding company for the Tata Group. Within a year of taking charge, he barred Tata Group companies from awarding new contracts to the Shapoorji Pallonji firms, saying it would be "appropriate" to "no longer engage" with the latter as long as he was heading the Tata Group.

Also Read: TCS CEO N Chandrasekaran to be the next Tata Sons chairman?

The move was intended at avoiding any conflict of interest, but led to significant loss of business for the Shapoorji Pallonji Group, whose chairman emeritus is Cyrus Mistry's fat her Pallonji Mistry .

Also Read: B-schools to teach its students how not to get into ugly fights like Tata and Mistry

The issue came back into focus over the last fortnight following allegations in the media that one of the reasons for Mistry's ouster from Tata Sons was that he was favouring Shapoorji Pallonjis during his tenure as Tata Sons chief.


Mistry's October 30, 2013 letter to Tata CEOs says: "The Tata Group has always prided itself on acting ahead of laws and regulations to adhere to the highest standards of corporate governance in our country for over a century. In furtherance to the same philosophy and to avoid any perception of a potential conflict of interest, I believe that, as long as I am the executive chairman of Tata Sons, it would be appropriate that the Tata Group of companies no longer engage with the Shapoorji Pallonji Group of companies for any engineering and construction contracts."

"Current contracts under the execution by the Shapoorji Pallonji Group of companies can, however, continue till completion," said Mistry's letter. It also requested Anil Sardana, CEO of Tata Power, R Mukundan, CEO of Tata Chemicals, T V Narendran, CEO of Tata Steel, among others, to place the matter "at the next board meeting after which you may suitably implement the recommendation".