By our Commercial Correspondent
Mumbai: The Tatas and the Shapoorji Pallonji (SP) group have set the ground for reconciliation with a view to regaining their lost glory of friendship.
For about eight years now , Tatas and SP group were at loggerheads following the unceremonious sacking of Cyrus Mistry from the covetous post of the Chairman of the Tata Sons on October 24, 2016 , just only five months for the expiry of five year term. He was appointed the Chairman of the Tata Sons for a period of five years in 2012.
After his removal, Mistry accused Ratan Tata of interfering in Tata Son’s operations despite retiring , alleging compromised governance and decisions driven by emotion rather than sound business judgment.
On the other side, it is believed that Ratan Tata was furious that Cyrus Mistry whom he viewed as an outsider and interloper, should dare to take claim to Jamsetji’s sacred legacy. Ratan’s supporters too framed the battle as one to preserve certain values and ethics.
It was a confrontation that set off tremors at the Bombay Stock Exchange , dominated the front pages of the Indian Newspapers for days and even made head lines abroad.
The Tata group was then India’s largest corporate house with an annual turnover of well over $100 billion.
Within months of his removal from chairmanship of Tata Sons, Cyrus Mistry and his elder brother Shapoor Mistry filed a case before the national Company Law tribunal (NCLT). They argued that Cyrus’s dismissal was illegal and that subsequent actions of the Tata group amounted to suppression of minority shares.
The Tata Trusts held 66 per cent shares in Tata Sons and SP group held 18.37 per cent shares. Mistry’s case was rejected outright by NCLT. But the appellate tribunal took a diametrically opposite position , upholding almost all of Mistry’s charges. But finally the Supreme Court in 2021 ruled decisively in favor of the Tatas.
Thus the Tatas began to view SP group as its enemy and acted accordingly. The Tatas put the SP group in a cul de sac and in September 2017, the Tata sons board voted to become a private company which meant Cyrus family company , the Shapoorji Pallonsji group , with its minority stake , would not be able to sell its shares without the approval of of the board of directors of the Tata Sons.
The rule ensured that the equity shares of the Mistry brothers would be, for all practical purpose locked and they would not have a chance to monetiseit.
The recent Supreme Court ruling has upheld the decision of the Registrar of Companies to convert Tata sons into a private company. It was also disturbing for the SP group that the newly introduced Article 75 of the Tata Sons Articles of Association.
The media reports confirmed that the article stipulated that the shareholders could be compelled to sell their shares if more than 75 per cent of shareholders present at any meeting that they do so.
SP group’s shares in the Tata Sons valued over Rs 3 lakh crore. Newly appointed chief of the Tata Trusts, Noel Tata’s wife is Aloo Mistry is the daughter of late Shapoorji Pallonji and Cyrus Mistry’s sister.
Noel is known for non-confrontational leadership and good and gentle behavior with all.
Noel’s family connection put him as a qualified potential mediator in the issue.
According to the industry sources , the friendship with Tatas and SP group would be good for not only them, but also the industry as a whole in the country.
The sources said that a preliminary meeting between them in this regard would take place shortly. “ We are hopeful that both sides could forget the past and find a constructive way forward”, they added.
During the latest annual general meeting of the Tata Sons , the SP group’s representative reportedly praised the growth of Tata group of companies , signaling that that the hostilities had come to an end.
The sources close to Bombay House said that it was not the principle and policy of the Tatas to maintain umbrage at any body for ever.
