Shapoorji Pallonji tightens grip over Tata

Nov 24 2011, 13:52 IST
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Cyrus Mistry, the youngest son of Pallonji Mistry will take over from Ratan Tata. Cyrus Mistry, the youngest son of Pallonji Mistry will take over from Ratan Tata.
SummaryCyrus Mistry is the second person from outside the Tata family to head the group in 142 years.

The Shapoorji Pallonji (SP) Group has tightened its grip over the $83.3 billion Tata empire. As Cyrus Mistry, the youngest son of Pallonji Mistry — who is worth $8.8 billion as per Forbes List and known as the Phantom of Bombay House (the headquarters of the Tata Group in Mumbai) — is set to succeed Ratan Tata as the head of the century-old group, the SP Group will have both management and shareholder control over the group founded by Jamsetji Nusserwanji Tata in 1868, with his selection raising several questions.

Cyrus is the second person from outside the Tata family to head the group in the last 142 years of its existence. After the death of Sir Dorab Tata, Nowroji Saklatwala was the head of the group from 1932 to 1938. However, another Tata — JRD Tata — succeeded Saklatwala, bringing the group back under the control of the Tata family again.

The Mistry family which holds around 18 per cent stake in Tata Sons is the largest individual shareholder — and non-Tata shareholder — in the Tata holding company. Tata Trusts and some of the Tata Group companies hold the remaining stake. Now the SP Group will have management control over the group as Cyrus Mistry will become the chairman of Tata Sons.

“It was clear that only a person who is approved and enjoys the confidence by Pallonji Mistry will be able to succeed Ratan Tata. It was in this context that Noel Tata’s name was speculated by corporate watchers and the media. But the selection of Cyrus is a surprise. Who opposed Noel Tata’s name? Who suggested the name of Cyrus?” asked a long-time Tata watcher.

Interestingly, Mistry was on the selection committee appointed by the Tata Sons board. How can a selection panel in which Cyrus Mistry himself was a member select him as the next head of Tata Sons? The press statement issued by Tata Sons on Wednesday did not disclose the procedure adopted by the panel while selecting Cyrus Mistry.

The second issue being highlighted by corporate watchers is that Cyrus Mistry lacks the experience in running big listed companies. He was involved in managing the construction business of the SP Group. Though Ratan Tata said “he (Cyrus) is intelligent and qualified to take on the responsibility being offered and I will be committed to working with him over the next year to give

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