Tata Sons: Passing the Baton
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Image: Vikas Khot
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THE MISTRY CONNECTION Cyrus Mistry's father, Pallonji Shapoorji Mistry, served on Tata Sons' board till 2005. He was obsessively private, earning him the sobriquet, ‘the phantom of Bombay House’
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he passing of a crown is always a delicate affair. In 1991, when J.R.D. Tata handed his to Ratan Naval Tata, his courtiers had rebelled. It took time for RNT to subdue the satraps and prove JRD’s decision on his successor was perhaps his finest. But then JRD was always renowned for his ability to pick men. The circumstances around anointing RNT’s successor exactly two decades later were rather different. The world and the Tatas had changed.
It would take more than an arbitrary announcement from RNT to achieve a smooth succession in what is now one of the world’s largest conglomerates. So, if Cyrus P. Mistry is the first Tata head to have been crowned by committee rather than King, and the first from outside India Inc.’s first family, it is a testament to Tatas’ ability to move with the times. Yet, to those who know Tatas and its history, there is also no doubt that there is a continuing thread of history in Mistry’s appointment.
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Ties between the Mistry and Tata families have been close — and contentious — ever since 1936 when Cyrus’s grandfather Shapoorji Pallonji Mistry bought 17.5 percent of Tatas’ main holding company, Tata Sons. Shapoorji’s frugal and industrious father Pallonji was a builder, but construction then was not the lucrative business it is today. The family lived in a cramped tenement near Grant Road in Mumbai and built their future stone by stone.
At around the same time, the 1860s, Nussurwanji Tata and his cousin and brother-in-law Dadabhoy Tata were just entering ‘the China trade’, a euphemism for the ships that ran from India to China, carrying opium on the way in and tea, silks and pearls on the way out.
Both Tatas made a fortune in the business. But unlike other traders, there lurked an industrialist’s soul in both Nussurwanji’s and Dadabhoy’s sons, Jamsetji and Ratanji (RD).
While other traders spent their wealth building sumptuous homes that still grace Mumbai’s streets, in 1874, Jamsetji and RD ploughed their profits into building the Empress Mills in Nagpur. The US civil war had taken American cotton off the market and Indian textile companies like Empress Mills made a killing.
Even as the Tatas prospered, the Mistrys struggled. But Shapoorji was tenacious and formed an eponymous company Shapoorji Pallonji & Co. whose flawless execution of several contracts impressed architects and clients. But the real turn in Shapoorji’s fortunes came when he began building homes for the city’s elite.
One of them was the eminent landowner-lawyer-financier Framroze Edulji Dinshaw. The scion of a landed family, he grew his inheritance to include some 2,200 acres of land and even today his estate is one of Mumbai’s biggest landowners.
Dinshaw was a close associate of the Tatas and in the 1920s asked famed architect George Wittet, who’d designed Tatas’ HQ, Bombay House and Victoria Terminus, to build him a house in Poona. When Dinshaw showed Wittet’s drawings to his friend Sir Sorabji Pochkhanawala, the banker insisted that the only contractor who would do it justice was the man who had just built his own home, Shapoorji Pallonji Mistry. Dinshaw and Shapoorji got along famously.
When the Tatas began executing their vision of industrialising India, Dinshaw was instrumental in financing them.
This was crucial to Tatas’ success. While Jamsetji’s vision of building India’s first steel mill and hydro power plant transformed industry in India, the projects almost bankrupted the Tatas. If they persevered it was because of a sense of mission.
After Jamsetji’s death in 1904, the onus of executing his grand vision fell to his sons, Sir Dorabji and Sir Ratanji. They were joined by Jamsetji’s old partner R.D. Tata. The three merged RD’s family firm Tata & Company with Jamsetji’s family firm Tata & Sons to create the company that eventually brought the Tatas and Mistrys together — Tata Sons.
It remains Tatas’ main holding company to this day.
Tatas’ suffered another setback when Sir Ratanji died prematurely in England at the age of 47. He was a sensitive and artistic man who initiated many of Tatas’ social works.
Sir Ratanji was childless, and after setting aside the Tata Palace opposite the Bombay Gymkhana and a small portion of his approximately 40 percent stake in Tata Sons for his widow, Lady Navajbai Tata, he bequeathed his assets worth about Rs. 80 lakh to the Sir Ratan Tata Trust.
The move transformed Tatas. Not only did Sir Ratanji’s endowment establish Tatas’ trusteeship principle, as one of the oldest charitable institutions in India, it pioneered modern ideas of secular, social services-oriented philanthropy.
Now, the hand of God is always present in the fortunes of men. When Sir Ratanji died, the Tatas, all observant Zoroastrians from a priestly family, were unsure of how to perform his Uthamna, or death ceremony, as it is traditionally conducted by a son.
Sir Dorabji decided the solution lay in Lady Navajbai adopting one of four young orphans he was sheltering in an orphanage. The boys were the children of Ratanbai Rao, the niece of Sir Jamsetji Tata’s wife Hirabai and the boys’ father, Hormusji, was also a Tata.
Lady Navajbai agreed and chose the one “with the nicest eyes”. His name was Naval Hormusji Tata. At the time, Lady Tata probably had no inkling of how her decision was destined to echo through history.
Sir Dorabji also remained childless. The Tatas, as business chronicler Gita Piramal put it, “are not a fecund family”.
But R.D. Tata’s branch of the clan had no such reproductive problems. He married a French lady, Suzanne Briere, and they had five children, Sylla, Jehangir (JRD), Rodabeh, Darab and Jimmy.
In an interesting footnote to history, RD christened his wife Sooni and tried to have her converted to Zoroastrianism. But the Parsi community, which bases its identity on its Persian origins and ancient faith, objected and RD lost what became the community’s first court case on conversion.
Through all this, RD and Sir Dorabji soldiered on, often risking their personal wealth and doubtless their health, to build Tata Steel and Tata Hydro. Dinshaw continued to fund and advice them, and his role and importance in the group grew.
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