The Mistry family said Tuesday that it was time to exit the Tata Group, according to media reports, bringing the 70-year-old relationship to a bitter end.
Reclusive tycoon Pallonji Mistry, 91, who has a net worth of $11.4 billion, controls the 155-year-old Shapoorji Pallonji (SP) Group, an engineering and construction giant based in Mumbai. The family’s biggest asset is its 18.4% stake in Tata Sons, the holding company of Tata Group, a conglomerate of 30 companies with revenues of $113 billion.
On Tuesday, SP Group reportedly said, “it is with a heavy heart that the Mistry family believes that a separation of interests would best serve all stakeholder groups.”
The development marks the end of a four-year battle between the two families which started when the board of Tata Sons suddenly ousted Pallonji’s younger son Cyrus from the chairman’s post in October 2016.
Tata family patriarch and previous chairman Ratan Tata was installed as interim boss until he was replaced by Natarajan Chandrasekaran, the chief executive of Tata Consultancy Services, an IT powerhouse that is the group’s most profitable company. The selection of Chandrasekaran was widely applauded.
The ouster of the younger Mistry, on the other hand, came as a shock to many in corporate India, especially since he was part of the family that is Tata Sons’ biggest shareholder. Moreover, the two families also happen to be linked by marriage—the Mistry patriarch’s daughter is married to Ratan Tata’s half-brother Noel Tata.
After his sudden removal from the chair of the privately held holding company of the group, Mistry made a series of allegations of wrongdoing at the conglomerate. For long regarded as a group with high ethical standards, Tata’s reputation was damaged in the aftermath of the boardroom coup when Mistry went on the offensive. The Tata Group has maintained that it adheres to the highest levels of corporate governance in its operations.
The feud, which eventually landed in court with a series of allegations and counter-allegations being traded, may finally come to an end with this exit. The SP Group’s statement came within hours of the Tata Group informing the court that it was ready to buy out the former’s stake.
The Mistry family had been seeking to pledge its shares in Tata Sons to raise funds to pay off the considerable debt in their group. But those efforts were hindered by the Tatas who sought to block the move in court because they have the first right of refusal to buy the Mistry family’s shares.
As per media reports, SP Group has said it will exit the Tata Group, but it “was crucial that an early resolution is reached to arrive at a fair and equitable solution reflecting the value of the underlying tangible and intangible assets.”