Shapoorji Pallonji Group said Tuesday it was time to end its seven-decade-long relationship with Tata Group, as their ties worsened over the past few years especially after the sacking of Cyrus Mistry as Tata chairman in 2016.
The construction conglomerate led by reclusive billionaire Pallonji Mistry said in a statement that it told the Supreme Court a separation from Tata Group was necessary due to the potential impact of their legal tussle on the livelihoods of thousands of its employees.
“The SP-Tata relationship spanning over 70 years, was forged on mutual trust, good faith, and friendship,” the company said. “It is with a heavy heart that the Mistry family believes that a separation of interests would best serve all stakeholder groups.”
The Shapoorji Pallonji Group is the largest minority shareholder of Tata Sons Pvt. Ltd, the holding company of Tata Group, with an 18.37% stake. And today’s statement means it is willing to sell this stake.
The two groups have been at loggerheads ever since Tata Sons sacked Cyrus Mistry as its chairman in October 2016 after he fell out with Ratan Tata, the group patriarch, over corporate governance issues at Tata companies.
Mistry later challenged the sacking in courts. Late last year, the National Company Law Appellate Tribunal (NCLAT) called the appointment of N Chandrasekaran, after Mistry’s removal, illegal and also asked Ratan Tata not to interfere with matters of the company. Tata Sons appealed the NCLAT ruling in the Supreme Court.
The latest statement comes after the SP Group sought to pledge its stake in Tata Sons to raise funds, a move that the steel-to-software conglomerate opposed.
The SP Group was planning to raise Rs 11,000 crore from investors including Canada’s Brookfield Asset Management Inc, according to multiple media reports.
In its statement, the SP Group said that Tata Group’s actions to block this crucial fundraise in the middle of the coronavirus pandemic is the “latest demonstration of their vindictive mind-set”.
Meanwhile, the Supreme Court on Tuesday restrained the SP Group from pledging or transferring its shares in Tata Sons until October 28, the next date of hearing, multiple media reports said. The court also directed the two sides not to take any further action on the shares which have already been pledged till October 28.
