The TATA Group


February 25, 2007

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The Tata family has a tiny stake in Tata Sons, the holding company which owns the controlling stake in all the companies under the banner.

Ratan Tata himself is said to own about one per cent stake in Tata Sons. Around 65 per cent of the shares in Tata Sons are held by different Parsi Charitable Trusts in keeping with the spirit of public service endorsed by the company’s founder, Jamsetji Tata.

The last century saw the family of prominent construction magnate Shapoorji Pallonjee Mistry buy into a whopping 18.5 per cent shareholding in Tata Sons, thereby emerging as the single largest stakeholder in the company.

Corporate lore has it that relations between the Mistry family and the Tatas remained frosty since the time of JRD Tata. However, both families are said to be very close with Ratan Tata’s half-brother Noel marrying into the family. Mistry’s son Cyrus is now on the board of Tata Sons.

The Mistry family is said to have hit the jackpot when TCS, entirely owned by Tata Sons, went public a few years ago. However, the family continues to remain media shy and very little about its fabled wealth makes it to the mainstream press. With a net worth of Rs 9,200 crore estimated by Forbes magazine in 2003, Pallonji is India’s fifth
richest man.

The only time the Mistry family was thought to be exercising their clout in the Tata group was when Pallonji took over as the Chairman of ACC. Subsequently, the company was sold to the Gujarat Ambuja group.

The Shapoorji Pallonji Mistry group has now emerged as a major construction company with projects in West Asia, South America and other countries. The company has now forayed into road construction projects.

With Pallonji’s son-in-law Noel likely to take over the mantle of the company from Ratan Tata, more may be seen and heard of this family in the years to come. — S.K.

Clear of the clouds

Ratan Tata’s name was almost sullied when the Tata Finance controversy broke in 2000-01. Dilip Pendse, Managing Director, Tata Finance Ltd handpicked by Ratan Tata himself was caught up in the middle of a controversy when several investments made by the company in its subsidiary Niskhalp Investments went bad. As the net closed in on Pendse, he insisted that the company’s board of directors, meaning Tata himself, was aware of the dealings of Tata Finance.

The Tatas had to pump in between Rs 500 and Rs 700 crore to protect the investments of fixed deposit holders and stakeholders. “No Tata Finance fixed deposit holder or stakeholder has suffered a loss. We have pumped a sum of Rs 500-700 crore into the company. We have put in the money because it was our moral responsibility,” Ratan Tata stated at the height of the controversy.

The Tatas subsequently sued Pendse for cheating and criminal breach of trust and for causing a Rs 424-crore loss to Tata Finance.

While Ratan Tata shrugged off the controversy arising from the Tata Finance business, a bigger disappointment lingers. Attempts to re-enter the aviation business has been stonewalled for a number of reasons.

Ratan Tata is keen on this sector because his mentor JRD Tata is known as the “Father of Indian Aviation.” The first Indian airline, Tata Airlines took off when JRD Tata flew a Pussmoth carrying the first ever air mail from Europe to India. The industry was subsequently nationalised though the Tatas never could return to the field when the private sector was allowed back in. — S.K.