Friends, frenemies, foes: Twists in Tata-Mistry ties

MUMBAI: The Tata-Mistry relationship is perhaps best described Facebook style: It's complicated. Cyrus Mistry's family and the Tatas have at times been friends, and at other times frenemies since the time Cyrus's grandfather Shapoorji Mistry acquired a sizable stake in Tata Group's main holding company, Tata Sons in 1936.
A Tata observer said that the Mistry family's holding in Tata Sons and their presence on the board has often been a matter of discomfort for the Tatas. "Cyrus's removal as company chairman could be a master stroke that may put pressure on the Mistrys to check them out from Tata Sons," the observer said. But that may be a trifle optimistic. Tata Sons is currently one of India's richest privately held companies. Mistrys' 18.5% stake in Tata Sons is worth billions of dollars, and Tatas may find it an uphill task to buy them out, just as they have found it in the past.

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Tata Sons is the holding company of hundreds of unlisted and nearly 30 listed companies. The listed companies alone are valued at about Rs 8.3 lakh crore (about $125 billion). Going by the value of only the listed companies within the Tata fold, the 18.5% stake held by the Mistry family would be worth about $23 billion.

Shapoorji had acquired Tata Sons shares from the heirs of eminent financier FE Dinshaw in 1936, seven years after Cyrus' father was born. Dinshaw had lent nearly Rs 1 crore to Tata Sons to finance its power unit in 1926 but the latter couldn't repay the amount and, subsequently, the loan got converted into 12.5% stake of Tata Sons. Later, Shapoorji bought some more shares from JRD Tata's siblings, thus increasing his stake to 18.5%.

The story goes that JRD Tata's siblings in a fit of anger had sold their shares to the builder, who has made some famous Bombay landmarks like the Brabourne Stadium and SBI headquarters. Not much is known about why Nowroji Saklatvala, who was chairman of Tata Sons between 1932 and 1938, did nothing to prevent the stake sale. JRD Tata, who succeeded Saklatvala, is reportedly said to have been upset with the entry of a non-Tata family (Shapoorji) into Tata Sons. Mistrys' large shareholding gave them one seat on the board of Tata Sons.

After Shapoorji's death in 1975, Pallonji (Cyrus' father) took his position at Tata Sons. While Shapoorji was believed to have had a tumultuous relationship with the Tatas, Pallonji had a much friendlier relationship with the family. Also, he never interfered with the functioning of Tata Sons. A year after Pallonji stepped down in 2005, Cyrus, his youngest son, took his position at Tata Sons. And in November 2011, Cyrus was named chairman of Tata Sons, the first non-Tata to head the company.

On October 24 afternoon, the 80-year-old relationship between the Tatas and the Mistrys turned bitter again.