Although the Infosys-NRN Murthy tussle has grabbed media headlines after the sudden exit of Vishal Sikka as CEO, the other big bad governance story is not going away either—it is Tata Sons versus Cyrus Mistry. First, a Tata trust director filed a Rs500-crore criminal defamation case against Cyrus Mistry which was temporarily stayed. Then, Tata Sons felt it necessary to announce that the entire group will sever all business ties with the Shapoorji Pallonji group (SP) which is the single largest shareholder of Tata Sons. A business newspaper reported that 50 companies of the SP group would be affected. What makes the release rather churlish is that this issue had come up for discussion at the height of the effort to oust Cyrus Mistry.
At that time, Mr Mistry had made it clear that he had himself, in 2013, taken a decision to stop business with his family group to avoid conflict of interest. Fittingly, the SP group hit back to remind that SP was a $5-billion global conglomerate with business across 40 countries and ‘any residual orders’ pending with the Tatas were “extremely insignificant in value for the SP Group.” On the contrary, the SP group has been a big customer of the Tata companies said a spokesperson. Among its big contracts with the Tatas were: purchase of steel worth over Rs400 crore last year and over 150 heavy commercial vehicles in the past three years. In their rush to discredit Cyrus Mistry, the Tatas seem to have forgotten that business is a two-way street and the SP group is not so tiny as to be sneered at or crushed.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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over the years because of one man's hubris.
Looks like in India everything depends not on your qualifications or the merit of your arguments but on who you "know" and how many arms you can twist - either by carrots or sticks.
Any investor would hesitate to put money in Indian business as a result of these dramas.