NEW DELHI: The other Mistry in the Tata battle. A little known actor may have played akey role in the Tata drama. Four months ago, a friend of former Tata Group chairman Cyrus Mistry got a visit from a group contractor. “Why is Cyrus doing this?” the contractor angrily asked. The friend said the contractor told him there would be repercussions if Mistry didn’t “mend his ways”.
The message was conveyed to Mistry, who according to this friend did not make much of it. After taking over as chairman, Mistry had sought “transparent” processes when contracts came up for tenders, said a person close to him. The angry visit, said people familiar with the issue, had been building up over past few years.
The contractor was none other than Cyrus’ first cousin Mehli Mistry, of M Pallonji and Co. “Cyrus had no idea the consequences meant his sacking and that his own cousin would play a role,” said the friend quoted earlier.
Mehli, 56, told ET he didn’t have a role in Cyrus’ removal. “The question posed to me was if I had the authority or power to remove anybody. My answer is, I do not and never did have any such power or authority,” Mehli said in a text message to ET.
A person close to Mehli said it is all in “Cyrus’ mind”. “Just because Ratan Tata is close to Mehli, how is he to be blamed for what happened?” the person said. Mehli, according to this person, has been in Dubai since Cyrus’ ouster and hasn’t spoken to his cousin, who is six years younger. “Members of the family, however, have been accusing him of playing a starring role in this whole saga. But it’s all incorrect,” the person said.
TWO SISTERS AND A BROTHER
Mehli and Cyrus’ mothers are sisters. “They were very close till this whole thing broke out. The sisters haven’t spoken ever since,” said a person close to the Mistry family. The family had been close till a few years ago. “Mehli and Cyrus had grown up together. Their relationship was cordial till about a few years ago. Everything changed once Cyrus became Tata Group chairman,” said that person.
Cyrus, said this person, sought a “fair and transparent process” when tenders, including some awarded to Mehli’s firms, came up. “As a first cousin, Cyrus had to be extremely cautious during the tendering process.
These would have come under related-party transactions. The instruction given was to be neither unfair nor favour Mehli’s firms,” said this person. This upset Mehli, who in turn started a campaign against his cousin, said a friend of Cyrus. “Cyrus believes Mehli led Ratan Tata to believe that Cyrus was working against him,” said this person. A person close to Mehli pointed out how he has never held an official position in any of the Tata Group companies. “Mehli has never been a director or sat on the board. If he was as influential as is believed, wouldn’t he have had some position?” the person said. Tata Group Chairman Ratan Tata declined comment.
However, a person close to Tata strongly refuted any suggestion that Mehli may have had a role in Cyrus’ ouster. He said that while Mehli may have been critical of Cyrus to Tata, he does not have significant influence over Tata. “It is unfair to blame Mehli for this. The only person to be blamed for Cyrus’ ouster is Cyrus Mistry himself,” said the person.
A Mistry family friend also pointed out how before Cyrus, Mehli had had a bitter falling out with another member of the family — his uncle Adi Dubash. Dubash, said a person close to him, suspected Mehli of trying to embroil him in a police case and getting him banned from all the Taj hotels in the country. “The ban was removed once Cyrus became the chairman, much to Mehli’s annoyance,” said a person close to Cyrus. Dubash is the only brother to Cyrus and Mehli’s mothers.
“Mehli’s uncle was being investigated by the Central Bureau of Investigation. How is Mehli to be blamed for it?” said a person close to Mehli.
Mehli’s friendship with Ratan Tata dates back to the time when Tata was a resident in the apartment complex where Mehli’s family stayed. “Mehli met him first when he was 10 years old,” said a friend of Mehli. The two formed a deep friendship and were often spotted travelling together.
The two Mistry cousins are related from their fathers’ side as well. Cyrus’ grandfather and Mehli’s grandfather were also brothers. One was a civil contractor and the other a painting contractor. The families branched into different businesses — the $2.5-billion conglomerate Shapoorji Pallonji Group with interests in construction, real estate, textiles and shipping, among others, and the relatively lesser known M Pallonji Group.
SHAPOORJI AND PALLONJI
M Pallonji and Company (MPC) was established in 1950. Till 1995, the net worth of the company was Rs 4 crore. In September 2004, Mehli’s firm got a barging contract from Tata Power. Cyrus was a director on the Tata Power board at the time, but he abstained from voting when the contract was being awarded.
At the time of the award of contract, the company had no previous experience of barging, people familiar with the issue said. The terms of the agreement included Tata Power financing MPC for the purchase of barging equipment. An interest-free loan was advanced and Tata Power entered into an exclusive contract with MPC for 15 years, automatically renewed for an additional 10 years.
A person close to Mehli denies that it was unusual for Tata Power to provide an interest-free advance to MPC. “MPC gave appropriate corporate guarantee for the advance,” the person said.
Filings made with the Registrar of Companies (RoC) show that in 2005, MPC posted a profit of Rs 12 crore. The cumulative profits at the end of 2014-15, when the last filings were made, amount to around Rs 600 crore. MPC’s filings with RoC have been irregular. “It’s incorrect to say that I was upset that there were issues with my firms’ contracts with Tata Power. My lifestyle is not dependent on the contracts from Tata Power,” Mehli told ET.
But RoC documents viewed by ET paint a different story. The barging contract is not the only one with Tata Power. One of Mehli’s firms has a painting contract worth around Rs 50 crore a year with Tata Power. RoC filings show that Mehli’s firm derives 90% of its business from Tata Power. “The contracts have margins of almost 100%,” said a person aware of the matter.
Some of the contracts were valid till 2013 and 2014, when Cyrus was the Tata Sons chief. Tata Power awarded those at significantly lower rates subsequently, leading to savings of Rs 150-200 crore annually for the company. MPC had even written to Tata Power expressing unhappiness.
“For one particular contract that Tata Power terminated, the matter went to court. The court appointed an arbitrator and we are continuing the contract pending arbitration. All the contracts issued were on tendered rates,” said an MPC official.
A person close to Mehli pointed out that during the time Tata was the chairman, the shipping contract that the firm had was retendered and did not go to MPC. “He had the contract for a number of years before it was re-tendered. He got back his capital and more,” said a person close to Cyrus.
It wasn’t just the contracts that led to tension between the two cousins. Cyrus, said a person close to him, also put an end to Tata Power jets being used for non-official purposes. “It was clarified that Tata Power helicopters were not for charter. They were only to be used for inspection of lines,” said the person. The person said this further annoyed Mehli, who would “frequently” use the helicopters. But a person close to Mehli told ET that he used the helicopter only once, and that he paid for it.
A lot more is flying around than helicopters in the Tata saga. And the last lines on the Other Mistry most likely haven’t been written yet.