The Leadership Vacuum At Shapoorji Pallonji Group
Why Cyrus Mistry's new role at the Tata group means a tricky transition at the SP Group
Around the same time that the press release from the Tata group began flashing on TV screens, senior managers inside the $2 billion SP Group received an email from Cyrus Mistry telling them about his new role at the Tata group — and the fact that all the construction and infrastructure businesses in the group that he looked after would now be led by his brother Shapoor. So why was Cyrus Mistry willing to give up managing and growing his share of the $8.8 billion family wealth?
In his book, perhaps that may be a small price to pay for getting a shot at being chairman of the largest and most respected business group in the country. By all reckoning, it will be a tricky transition at the SP Group. Here’s why:
The brothers are like chalk and cheese. While Cyrus is a workaholic, spending long hours at the office, Shapoor prefers to spend his time either with his circle of friends, drawn primarily from the race course circuit in Mumbai or away at his 200-acre Manjri Stud Farm, on the outskirts of Pune, tending to his stable of horses. In the initial days, while managing the real estate business, Shapoor barely spent two hours at work.
For a while now, their father Pallonji Mistry has left the running of the empire to his two sons. For more than six months, he lives in his mansion in Ireland, London or Dubai. While he was still around, Pallonji did his best to “corporatise” his elder son, by buying a controlling stake in Forbes (not us!), once the Tatas offloaded their stake there. But that hasn't helped. A few days after the announcement, Shapoor was scheduled to be away for an entire day hosting a friend’s birthday bash in Daman at the house of Kairus Dadachanji, his closest buddy and business partner.
For most part, the two brothers prefer to lead separate lives. Close friends of Shapoor say that every time they get invited to Sterling Bay, the Mistry family mansion overlooking the sea on Walkeshwar in Mumbai, Cyrus is never to be found. He also stays away from any Parsi navjot ceremonies. In such a scenario, in case the performance of the firms owned by him start to decline under Shapoor’s stewardship, it is anybody’s guess how it will affect their relationship.
A man is known by the company he keeps. Hardly anyone in Shapoor’s inner circle belongs to the A-league of Mumbai’s business families. In the past, his father has restrained him from striking business deals with many of his friends and associates. One of them offered to pick up a stake in Manjri stud farm and another large builder planned to jointly breed stallions from Ireland. But now, the father has apparently made it clear that he ought to stay away from such misadventures. How long the restraint orders will work is anybody’s guess.
A year ago, a global investment banker says when he met Cyrus, the scion was keen to explore opportunities in power and also buy coal mining assets for the group. Infrastructure is clearly a big ticket item for the group — but that’s well beyond Shapoor’s current area of interest: Real estate.
For most part, the group is still in its early stages of professionalising its management. Based on Boston Consulting Group’s recommendation three years ago, the group had strengthened its corporate centre. New professionals were inducted into key functional roles in the group. All investment decisions are now put through a committee. But the jury is very much out on how the group will fare in the coming months in Cyrus’s absence.
