The 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.
When Tata Steel fell into serious financial trouble in 1924, Sir Dorabji pledged his entire fortune worth about Rs. 1 crore (including his wife’s jewelry and Tatas’ renowed family home Esplanade House) to bail out the company. This was despite the fact that Sir Dorabji now owned less than 25 percent in Tata Steel.
In many ways, the story echoed the experience of countless Parsi families, where eccentric individuals often fought excessively over trifles, losing themselves and their wealth in a maze of litigation, accusation and resentment.
There were face-offs. RNT was worried about Tatas fragmenting and set about shoring up stakes in group companies and building interlocking holdings between them. To finance this, Tata Sons issued rights shares in 1996. The trusts didn’t subscribe to their rights but signed them over to Tata companies like Tata Steel. As a result, the trusts’ holding in Tata Sons fell to 66 percent and Tata companies came to own 13 percent in the holding company. Controversially, the companies paid for their stakes by issuing rights shares to their shareholders.
(This story appears in the 16 December, 2011 issue of Forbes India. To visit our Archives, click here.)
The history of Tatas always confused me, not any more. A well narrated one hundred year story. A commendable work indeed Mr. Jehangir.
on Mar 8, 2012Very impressive article, with a tremendous amount of research done by the writer. Though married to a Parsi, I am not one myself, and so have found this feature both interesting and enlightening.
on Jan 18, 2012Beautiful article Mr. Jehangir. Great, to the point, writeup throwing light on ethos of Tata Sons and the Tatas in all. Not to forget the connection established between Jamshetiji, JRD, RND and the Tata values. Hope Cyrus stands upto these stalwarts and the position achieved.
on Dec 13, 2011