(This story originally appeared in on Dec 20, 2016)

DREDGING, BARGING, MONEY

NEW DELHI: A 30,000%, or 300 times, jump in business in 20 years. The man who runs the companies that posted those results is Mehli Mistry , cousin of Cyrus Mistry ET’s review of Mehli Mistry’s business shows reserves of three companies – M Pallonji and Company Private Ltd (MPCPL), M Pallonji Shipping Private Limited (MPSPL), and M Pallonji Shipping Singapore Pte Limited (MPSSPL) – jumped from Rs 3.29 crore in 1994 to over Rs 900 crore at the end of 2014-15.Tata Power awarded some of the major contracts to Mehli Mistry’s companies during this period. After Cyrus Mistry assumed charge in 2012, a bidding process was adopted for contract renewals and Mehli Mistry’s companies lost some of these contracts.People close to Cyrus allege that Mehli, who’s believed to be close to Ratan Tata, had a part to play in his cousin’s ouster from Tata Son’s chairmanship.In an earlier ET profile of Mehli Mistry (‘The Other Mistry in the Tata Drama’, November 21), Mehli had denied that he had any role in Cyrus’ removal. People close to Ratan Tata had said the same thing.ET sent questions to Tata Sons on November 30, but got no response. Mehli Mistry did not respond to ET's request for comments. A Tata Power spokesperson said that the company would respond in detail.RK Krishna Kumar, former Tata Sons director, told ET via email that “every Tata company has a well-established...procedure to deal with tenders and no single person can circumvent that process”. He also said, “I have...known Mehli Mistry for over 20 years and can categorically say that, to the best of my knowledge, he has sought no favours... and if his company has been awarded the contracts...it must have been purely on economic merit”.Detailed review of company filings show Mehli Mistry’s business rise was related to Tata group ’s contracts.From 1993 onwards, Tata Power gave a number of contracts, some spanning 20 years, to three Mehli Mistry companies — MPCPL, MPSPL and MPSSPL.The contracts were for dredging, barging, painting works and shipping coal. Most contracts were awarded without floating tenders. Mehli had not had any prior experience in shipping or transporting coal or barging before these contracts were awarded.Consider the following:1. Tata Power gave a trial order in 1994 to MPCPL for barging. MPCPL’s regulatory filings show it had no dredging equipment at that time. Its acquisition of dredging equipment shows up in its 1995-96 accounts, after Tata Power awarded it an eightyear contract without inviting bids. In 2002, the contract to MPCPL was renewed for five years, again without bidding. The same happened in 2008. In 2013, when Cyrus was chief of Tata Sons, there was competitive bidding and Mehli Mistry’s company lost the contract. Tata Power made a saving of nearly 50%.2. MPCPL was shortlisted by Tata Power in early 2004 on a competitive basis for construction of a jetty in Trombay.The company also got a 15-year contract, extendable by 10 years, for barging. Tata Power also provided an interest free advance of Rs 15 crore to MPCPL to construct barges. The contract estimated a cost of Rs 7 crore per barge, and the advance was to cover roughly the cost of constructing four barges. But MPCPL’s 2005-06 accounts show three barges were capitalised only at Rs 3.975 crore each.3. In the same contract, coal transportation charges went up from Rs 179 per million tonne in 2004 to Rs 290.7 per million tonne in July 2012. Tata Power sought legal opinion later and was advised that competitive bidding be called for and that MPCPL be given the first preference to match rates. MPCPL has taken the matter to arbitration.4. In 2005, Tata Power awarded a one-year shipping contract to Mercator Lines Ltd. Mercator’s Singapore IPO filings states the Tata Power contract was in association with a Mehli Mistry company. In October 2006, a four-year contract was given to MPSPL, Mehli Mistry’s shipping company that was incorporated in October 2005, and Mercator.MPSPL acquired ships in 2006-07 after it got a shipping contract. When the same contract was thrown open to global tenders, a Tata group company, Tata NYK, won the bid and Tata Power, according to documents reviewed by ET, made an annual saving of Rs 150 crore.MPCPL’s 2005-06 filings show that out of its Rs 60.42 cr profit, Rs 51.24 crore came from Tata Power contracts. Similarly, the 2009 statement shows out of Rs 91.32 crore profit posted by the firm in that year, Rs 79.47 crore was from Tata Power. Business from other Tata group firms also accounted for some of MPCPL’s profit.