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Last Updated : Sep 22, 2020 09:35 PM IST | Source: Moneycontrol.com

Tata vs Mistry: Key reasons behind the widening rift between the two business groups

The sore point in this feud between the two business conglomerates was the ouster of Cyrus Mistry from the post of Tata Sons' chairman in 2016, a move that hit the headlines and how.

The relationship between the Mistry family-led Shapoorji Pallonji (SP) Group and the Tatas has undergone a gradual deterioration over the years. On September 22, the SP Group said it is looking to exit the Tata group.

The sore point in this feud between the two business conglomerates was the ouster of Cyrus Mistry from the post of Tata Sons' chairman in 2016, a move that hit the headlines and how.

Cyrus Mistry was only the second non-Tata chairman of the Tata group. At the time of his removal from the post, Tata Sons had alleged that during Tata Power's acquisition of Welspun's renewable projects in June 2016, the company's former chairman Cyrus Mistry had not kept the board in the loop about his decisions.


However, these allegations were refuted by Mistry. Reports citing emails had later suggested that trustees of Tata Trusts were involved in discussing the structure of the acquisition of Welspun Renewables by Tata Power.

The battle between the Tatas and Cyrus Mistry reached the courts, with the two sides engaged in a bitter showdown. However, some sore points in the relationship became the key reasons for the widening of the rift between the country's two Parsi business families.

The Tata group had accused Mistry of "repeated departures from the culture and ethos of the group", while stopping short of spelling out what those departures were.

This point can be seen in the alleged differences between Ratan Tata and Mistry over the latter's decisions pertaining to the ill-fated Nano deal.

Also, Tata has reportedly expressed his dislike for Mistry's handling of the factory workers, and has said Mistry "must go to factories and face workers, try to address their issues and not deal with it from Mumbai" as he felt this was not the "Tata way".

Meanwhile, Mistry has time and again questioned the continued the existence of the Tata Nano plant in Gujarat despite not producing a single car since 2017. This, the Tata group veteran has been heard defending while expressing his dismay at Mistry questioning "emotional" decisions.

Another report suggests that one of the earliest sore points between the two businessmen was the subject of poll funding, on which Ratan Tata had made known his dissatisfaction. The report noted that Mistry had been advised about a proposed Rs 10-crore funding for the Odisha Assembly elections in mid-2014.

The allegation of Mistry having gone against the Tata group ethos surfaced in yet another business dealing, the group's dispute with Japanese telecom firm NTT Docomo.

In November 2009, Docomo had acquired a 26.5 percent stake in Tata Teleservices for about Rs 12,740 crore, in accordance with a prior understanding that in case it exits the venture within five years, it will be paid a minimum 50 percent of the acquisition price. The Japanese firm in April 2014 decided to exit the joint venture, a move that was reportedly prompted by Tata Teleservices' financial woes.

However, a difference in valuation sought and offered by either party led to a prolonged bitter dispute over their telecom joint venture, whose handling of the matter was touted as one of the triggers for Mistry's ouster.
First Published on Sep 22, 2020 09:35 pm