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| The Enigma
called Pallonji Mistry |
| Despite being one
of the richest Indians and the single largest shareholder
of Tata Sons, Pallonji Shapoorji Mistry has preferred
to remain in the shadows. But soon, he may not be
able to. |
| by Indrajit Gupta and T. Surendar |
|
 If
Noel does get the nod, it could bring an interesting
twist to the decades old Mistry-Tata equation. JRD
and Ratan Tata’s relationships with Shapoorji
(Mistry’s father) and then with Mistry himself
have seen as many downs as ups. None of it has ever
been fully documented by business historians. In
fact, in the official history of the Tatas dating
back to the pre-Independence days, the Mistry family
doesn’t even find a mention — not even
as a footnote.
Interestingly, journalist and official Tata chronicler
R.M. Lala, in his book on the Tatas, The Creation
of Wealth, and the biography of J.R.D. Tata, Beyond
the Blue Mountain, refers to the Mistrys vaguely
as an “independent party” that owns a
17.45% (since increased to 18.37%) stake in Tata
Sons. Even Harvard Business School professor Tarun
Khanna, who along with Professor Krishna Palepu,
wrote a three-part case study on the House of the
Tatas, says he never came across any reference to
the Mistrys during his research. It was almost as
if someone had removed the Mistry name from the
annals of Tata history. But why? More on thatlater.
 Even
the mere prospect of Noel’s ascendancy could
throw up many interesting possibilities. One, will
it bringthe Tatas and the Mistrys closer? A close
Tata watcher says: “Apart from having the advantage
of having a Tata at the helm of the group, it could
bridge the differences that existed historically
between the two families.” Of course, the other
moot point: will the transition ensure that Mistry
finally emerges from the shadows to play a more
vital role in the Tata group?
All this depends on how Ratan makes his next moves.
So far, the picture is still hazy. At one level,
there are signs of a rapprochement between Ratan
and Mistry. Mistry’s sons Shapoor and Cyrus
have earned a berth on the board of Indian Hotels
and Tata Power respectively. Meanwhile, Noel himself
has recently been elevated to the Voltas board.
 But
the big test is just round the corner. This year,
Pallonji Mistry will step down from the Tata Sons
board, according to the group’s policy of sitting
directors retiring at 75. Mistry apparently wants
Shapoor, his 39-year-old son, to take his place
on the Tata Sons board. Yet, whether Ratan or the
rest of the board will agree is still unclear. Insiders
say that many members of the board are dead set
against giving Shapoor a berth — and they could
easily block him despite Mistry’s 18.37% stake.
In an interview to a business daily last year, Ratan
Tata said: “It’s true that Mistry would
like to do that. But there is no shareholder’s
agreement that says that this is to be done. And
we’ll deal with it when the time comes.”
Either way, the future of Mistry’s role in
Tata Sons is reaching a decisive stage. Some of
it could depend on whether Ratan Tata chooses to
forget the history of the relationship that goes
back to the 1930s, when Mistry’s father, Shapoorji
Pallonji Mistry, muscled his way into Tata Sons.
The Mistrys first became Tata shareholders after
they bought out solicitor F.E. Dinshaw’s estate.
Dinshaw owned a 12.5% stake in Tata Sons sometime
in the 1930s.
Around the same time, in 1932, the Tata group went
through a painful transition. Both Dorab Tata, Jamsetji’s
eldest son, and R.D. Tata, JRD’s father, had
passed away. Since both Sir Dorab and his brother
Sir Ratan were childless, the reins passed on to
Nowroji Saklatwala. (Till date, he is the only non-Tata
to head the group.) However, in 1938, Saklatwala
suffered a massive heart attack and passed away.
The Tata Sons board then decided to appoint J.R.D.
Tata, Dorab’s nephew and R.D. Tata’s son,
as chairman of
Tata Sons. He was just 34 years old then. By then,
rumours began to spread that the group’s future
was in jeopardy.
Sensing the opportunity, Shapoorji Pallonji Mistry
began to make his moves. He approached members of
the Tata family and offered to buy out their shares
of Tata Sons. Uncertain of the value of their investment,
many of them choose to sell out. When JRD got wind
of it, he was incensed. He castigated the family
members, labelling them as ‘weak-willed’
and ‘credulous’. But, by then, Mistry
had raised his stake to 16.5%. Apart from the pressures
of steering the group through choppy waters, JRD
now had to contend with an ambitious outsider in
the holding company itself.
The trouble was JRD himself and his family owned
barely 3.5% stake in Tata Sons. The balance 78%
stake was owned by the two main Tata trusts, named
after Sir Dorabji Tata and Sir Ratan Tata, and two
others, named Lady Tata Memorial Trust and Lady
Meherbai D. Tata Education Trust, to keep tight
control of Tata Sons.
 Of
course, as head of the Tata Group, JRD had full
authority to appoint the trustees and also nominate
a chosen few to the board of Tata Sons. So, on the
face of it, there was no real danger of ceding control.
But JRD remained wary of Shapoorji.
Somewhere along the way, even though JRD’s
relationship with Shapoorji had gotten off to a
bad start, there was a patch-up, apparently due
to a marriage between the two families.
Shapoorji agreed to remain a passive investor, leaving
the Tatas to manage the business. In fact, since
then,
the Tata group also awarded many of its prestigious
contracts — the Taj Intercontinental, Titan
factory, and Forbes Resilens factory — to Shapoorji’s
construction company. Shapoorji also owned one of
biggest Telco dealerships through United Motors
(which since then downed its shutters).
 Shapoorji’s
buoyant construction business ticked along merrily.
Through the 1930s and the 1940s, Shapoorji built
some of Mumbai’s landmarks around the Fort
area — the Hong Kong Bank, Grindlays Bank,
Standard Chartered Bank and Reserve Bank of India
building, many of which are today listed as heritage
buildings.
Shapoorji Mistry also gradually ventured into the
real estate business. Interestingly, all his projects
were
concentrated in South Mumbai. In the 1930s, he developed
Winderemere, a posh residential apartment in Colaba,
where Mistry lived earlier before he shifted to
Sterling Bay. He followed it up with Sterling Apartments
on Pedder Road in 1969. |
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