A few weeks ago, he seemed like the power behind the throne in one of the most intense corporate boardroom battles in the country. Today, he seems humbled, cowering outside the corporate court. Mehli Mistry, a staunch loyalist of the late Ratan Tata, and not-too-long-ago an influential and vociferous trustee of the Tata Trusts, which own a majority stake in Tata Sons, the holding company that glues together the salt-steel-software empire, laid down his weapons. He squeamishly walked away from the battlefield. What a whimper of a turnaround! What an anticlimax! What a non-story!
Even a few days ago, it seemed like Mehli was still on the rampage. Despite being ungraciously and callously thrown out of Tata Trusts, at least the major ones, he was ready to change the battle scene, and don several lethal legal armaments. Alas, it was not meant to be. In a tame letter, which had the markings of a lost-and-out corporate warrior, he stated that he was walking out, obviously with his tail between his legs, or head buried in the knees, to keep the flame of Ratan Tata’s legacy burning bright and strong.
Obviously, the question on everyone’s lips is why. Experts and observers are groping for answers to explain how the tide changed within 48 hours. One can seek them in social identities, business cohorts, political links, and the public sphere. A complex and explosive combo of these issues forced Mehli’s hands. In the end, Noel Tata, Ratan’s half-brother, and the new heir, has tightened his grip over the Tata Empire. The beginning of Noel’s reign seems to uncannily resemble that of Ratan. There are several similarities, coupled with the fact that the battlefields and warfare strategies are different.
For more than 150 years, the Parsi community has invariably impacted and guided the destiny of the Tata Group. Apart from the members of the extended family, which include cousins, half-brothers, uncles, and even women members, renowned non-family Parsi businesspersons, social elites, and the community’s Civil Society have nudged the founders and heirs in specific directions. One of the main reasons is that the group always depended on the broader advice to take crucial decisions, or manage corporate crises. In addition, Parsis are invested in the firms, and derive most of their incomes and wealth from the Tata shares they own.
So, when Ratan Tata took over in the early 1990s, he was helped by Bombay Dyeing’s Nusli Wadia to get rid of the technocrat and independent satraps, who lorded over specific firms within the group. The overlords paid little heed to what they thought was a green, naïve, inexperienced, and a loser heir, with no history of corporate success. Wadia turned the guns against Ratan, when the latter battled with the late Cyrus Mistry, whose sister is married to Noel. Other powerful Parsis get into the act whenever the group is in trouble, as they did during the recent Noel-Mehli tussle.
While a few business rivals took delight in the fight, and maybe goaded the two parties to keep at it till the empire cracks, others put their weight behind Noel. Mehli’s business antecedents are weak. His grandfather and Cyrus’ grandfather were brothers. While the latter transformed into the $2.5 billion Shapoorji Pallonji Group, the former remained puny in comparison, and became the lesser-known M Pallonji Group. Thus, Noel garnered substantial support from the business community, both Parsi and non-Parsi. The backers included South Indian businesses, thanks to Noel’s friendship with Venu Srinivasan of the TVS Group’s fame, who is a trustee in Tata Trusts.
Fortunately, Noel had begun to mend ways with the estranged Cyrus Mistry family, which was peeved since Ratan kicked out Cyrus as the group chairman, after personally picking him up as the heir. The Cyrus family was interested in forging a new relationship because of its minority, but substantial stake, in Tata Sons. It wishes to sell the stake through the listing of the holding company, which is mandated by the central bank’s rules, but opposed by Mehli and his loyalists. The cash will enable the Cyrus family to pay its debts. Noel may not like listing, but wants a patch-up with Cyrus’ family.
Politics has intertwined with the Tata legacy for more than a century, which is true for most well-known business houses globally. A decent chunk of the original shares of Tata Steel, and Tata Hydro-Electric were picked up by the rulers of the princely states in the pre-Independence era, largely because of the goading by the British colonial officials. As the Tata Group expanded, it sought other benefits like land, protection from imports, and government purchases (which saved it from certain ruin in a few cases). Recently, it took a huge loan from the British Government.
During the Mehli-Noel spat, the home minister and finance minister intervened. The latter sent a message to do whatever it takes to find a peaceful solution. This explains why Mehli gave a conditional okay for the lifetime appointment of Srinivasan, hoping that the favour would be reciprocated. It was not, and the tables turned against him. He found himself with irrelevant cards, with the four aces with Noel. Later, when he decided to take the fight to the courts, politics possibly played a part to dissuade him. No Government wants a renowned group to be mired in unnecessary boardroom battles.
Of course, there was the silent, but strong, public pressure against Mehli, and his supporters. Despite the various controversies that it was embroiled in, despite the way Ratan ejected satraps and Cyrus, despite the contentions that Ratan controlled the group through backseat driving, the Tata name is still revered by the public, and consumers, and within the society. Not many want its name to be tarnished and blackened for no rhyme or reason, just because there is a combat for control. This was reflected in the articles, as the media delighted in the news, but seemed to veer towards Noel.
For the time being the warring factions are silent. However, this is the beginning of the clean-up. Over time, if Mehli loyalists in Tata Trusts do not shape up, they are likely to be shipped out, just like Mehli was. It may mark the beginning of Noel exerting more control over the empire, or even his loyalists pushing him towards a specific direction. One will need to see if Noel has the same steely nerves that Ratan showed, or will he bend and sway like the hot liquid metal that can be drawn into thin wires, and rolled up.
