Cyrus Mistry vs Tata Group – decoding the battle of prestige between India’s most prominent Parsi families
Mistrywas once liked by Rata Tata, who called him astute and humble, and later anointed him as his successor in 2012.
- Mistry went on to become the sixth
Tata Groupchairman, and only the second without a Tata surname.
- However, Mistry’s ascension to the top of India’s biggest conglomerate was short-lived, with
Ratan Tatahimself ousting Mistry in a ‘palace coup’ in 2016.
- Here’s a run down the memory lane of the history between the Mistrys and Tatas, India’s most prominent Parsi families.
AdvertisementCyrus Mistry’s untimely death in an accident near Mumbai has come as a shock to many, but it has also re-opened the saga of his prolonged battle with the Tata Group and Ratan Tata.
Mistry was otherwise a very reclusive, private person, and not much is out in the public about his life. However, his battle with the Tata Group was as public and explosive as it could be, where he locked horns with Ratan Tata, the group’s managing trustee at the time, R Venkataramanan, and other senior officials.
Mistry was the chairman of the Tata Group for four years, from 2012 to 2016. During his tenure as the chairman, Mistry is credited for turning around Tata Motors, but he seems to have ruffled feathers during his tenure. His reclusive nature meant he did not host a single press conference during his four years as the group chairman.
But what could have gone so wrong that two of the most prominent Parsi families of the country ended up standing against each other, despite a partnership of over 90 years?
Tatas and Mistrys – how it all began
Tatas and Mistrys share nearly a century of relationship spanning over three generations.
It all began in the 1930s when Shapoorji Pallonji acquired a 12.5% stake in Tata Sons – the owner of the Tata Group – from FE Dinshaw’s estate. The SP Group’s stake increased to 18.5% after a rights issue in 1996.
Since then, the Pallonjis have remained quiet partners in the Tata Group. By some estimates, their investments amounted to just $11 million for the stake they have in the Tata Group, but the value of those investments has surged to several billion dollars over the years.
Who was Cyrus Mistry?
Born in 1968, Mistry got a civil engineering degree from Imperial College London. He joined his family’s construction company, Shapoorji Pallonji & Co., as a director in 1991.
His connection with the Tata Group began in 2006, when he took up the mantle of a director a year after his father retired. He was subsequently elevated as the deputy chairman of the Tata Group.
When Ratan Tata finally retired as the group chairman in 2012, Mistry replaced him and became the sixth chairman of the Tata Group – and only the second to not bear the Tata surname.
‘An appointment of convenience’, and not conviction?
AdvertisementUnlike Ratan Tata’s ascension to the throne as the head of the Tata Group, Mistry’s elevation was seen by some in the industry as an “appointment of convenience”, not conviction.
Further lending credence to this thought is Ratan Tata’s eventual return as the Tata Group chairman in just four years.
When Mistry entered his family business in 1991, Ratan Tata was elevated as the group chairman by his uncle, JRD Tata. Since then, the family patriarch has ruled over the group’s businesses.
How the Tata-Pallonji’s decades-long partnership broke down
Mistry, despite his reserved nature, pulled no punches when it came to steering the Tata Group’s future. He voiced his opposition to the group’s often expensive decisions – like the one to acquire Jaguar Land Rover, or rolling out Ratan Tata’s pet project, the ₹1 lakh Nano car.
Mistry also voiced his opposition to investing the cash sink that is the aviation business – Tata Sons eventually ended up acquiring a 51% stake in a $100 million venture, far above Mistry’s agreed promise of a 30% stake in a $30 million equity.
Mistry’s ouster from the Tata Group has been called a ‘palace coup’ by many in the industry. His pushback against the Tatas and attempts to steer the group to a low-debt high-margin regime eventually led to his downfall.
An ugly, public spat
While Mistry liked to maintain a low profile, his spat with the Tata Group was as public as it could get.
Eventually, Tatas’ relationship with Cyrus Mistry broke down so much so that Mistry was unceremoniously ousted as the chairman. This resulted in a legal tussle a few months later, going from the NCLT to the Supreme Court of India.
India’s top court eventually ruled against Mistry, and dismissed a review petition filed by the SP Group earlier this year, thus bringing an end to the 6-year long ugly legal battle that frayed ties between India’s two most prominent Parsi families.
Cyrus and I shared a laugh last month on a bench in London, says former strategy head of Tata Sons
Life and times of Cyrus Mistry – the most low profile man with the most high profile exit
Remembering Cyrus Mistry: 10 things to know about the former Tata Sons chairman
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