THE TATAS AND MISTRYS TRY TO RESOLVE LONG-STANDING ISSUES
which has been battling financial difficulties for a long time now, have compounded in recent times due to the two tragedies that have affected the family this year. On 28 June, the group’s patriarch, Pallonji Mistry, died in Mumbai at the age of 93. A few months later, in September 2022, his son Cyrus Mistry, died in a car accident at the age of 54. Cyrus Mistry was the younger brother of Shapoor, who was appointed as the chairman of the SP group in June 2012.
This had happened just a few months after Cyrus Mistry was, in November 2011, announced as the successor to Ratan Tata and Chairman of the Tata Sons, after a “search” that went on for 14 months. Cyrus Mistry at the time was only the sixth chairman in the 144-yearold corporate behemoth’s history.
However, the said arrangement died a premature death, when in October 2016, Cyrus Mistry was ousted as the chairman of the company, thereby earning the distinction, albeit a dubious one, of being the chairman of the Tata Group for the shortest time. The earlier “record” was held by Nowroji Saklatwala, the first non-tata surname chairman, who led the group from 1932 to 1938 before passing away from a heart attack.
Cyrus Mistry was removed by the Tatas ostensibly as he was “undermining” the legacy that was created by his predecessors, which had forced Ratan Tata to interfere in the company’s affairs repeatedly despite retiring. As per court records, more than 550 emails were exchanged between the Tatas and the Mistrys on how to run the group during the time Cyrus Mistry was the chairman. The Tatas were upset with issues like shutting down of the Nano project and decisions taken by Mistry related to other Tata group companies such as Indian Hotels Company Limited and Tata Teleservices Limited.
As per “The Story of Tata:
1868 to 2021”, written by Peter Casey, Pallonji Mistry’s father, Shapoor Mistry (not to be confused with the present chairman of SP group, who too goes by the same name), initially acquired shares in the Tata group in 1967, when he acquired 5.9%. The next purchase by the SP group was in 1969, of 4.81%. The final purchase came in May 1974, of 6.68%. All these three tranches were bought by the Mistrys from the family members of the Tatas. Then, through a “Rights offer” in 1996, the Mistrys brought their total holding in Tata to the 18.405 that it is today.
As per Casey, between 1965 and 1975, the SP group acquired almost 18% shares in Tatas for approximately $11 million. After battling court cases and then facing the ignominy of applying for RBI mandated loan structuring scheme in October 2020, following the Covid pandemic, the SP group under Cyrus and Shapoor Mistry, got an upgraded “A” rating by rating agency ICRA after they were able to successfully exit from the one-time restructuring (OTR) plan worth Rs 12,450 crore, with a repayment of the entire One Time Resolution (OTR) debt plan on 31 March 2022, ahead of the OTR timeline through infusion of funds by promoters, proceeds from monetization of assets and fresh term loan. The SP group is composed of 17 companies that have interest in engineering and construction, infrastructure, real estate, water, energy and financial services.
When it appeared that things were moving in the right direction for the Mistrys after a long time, tragedy struck by way of the death of Cyrus Mistry. According to industry insiders, Shapoor is now taking steps to resolve the dispute with the Tatas that was initiated in 2016 with the ouster of Cyrus Mistry. It is pertinent to mention that Shapoor had inducted his son Pallon Mistry on the board of directors of the group in January 2019. These conciliatory steps, sources said, are being undertaken with the involvement of the common family friends of the Tatas and the Mistrys.
“Much has happened after those unfortunate times of 2016. Shapoor needs to focus on the future and so do the Tatas. The next generation should not pay for the deeds or the misdeeds of their ancestors,” a media personality, who has known both these families, told The Sunday Guardian.
“Shapoor is doing the right thing, something which ideally should have been done a long time ago. None of the two parties are getting any benefits from this dispute. The Mistrys need the cash infusion that they will get by selling their holdings in Tata, as they intend to come out of the financial and family troubles that have started plaguing them since the last few years. Similarly, the Tatas are wary, and rightly so, of the 18% shares owned by the Mistrys falling into the ‘wrong hands’, maybe someone like their business competitors. The best thing for both of them is to reach a common ground and arrive at a mutually beneficial understanding. The involvement of common friends is a good step towards this resolution,” a partner with one of the top three law firms in India told The Sunday Guardian.
The Sunday Guardian reached out to both the Tata group and the Shapoorji Pallonji group, seeking their responses on whether they were engaging to reconcile their differences. No response was received until this report went to the press.