The Pallonji Mistry family on Tuesday announced its decision to exit Tata Sons – the holding company of India’s largest conglomerate in which it is the largest minority shareholder with almost 18.4% – after a bitter and protracted four-year battle in courtrooms and outside.
In a 700-word-plus statement accusing the Tatas of “value-destructive business decisions” and of “oppressive” and “vindictive” actions aimed at “suppressing and inflicting irreparable harm to the SP Group”, the Mistrys said “the family believes that a separation of interests would best serve all stakeholder groups,” and that 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.”
“The action by Tata Sons to block this crucial fund raise, without any heed for the collateral consequences, is the latest demonstration of their vindictive mind-set,” the SP Group said in a statement late Tuesday. “It is with a heavy heart that the Mistry family believes that a separation of interests would best serve all stakeholder groups.”
Although the statement didn’t specify what a separation would entail, the intention was apparent. While a divorce would help put a stop to the acrimonious fight between the two sides, the main concerns still remain for closely held Tata Sons: how to arrange funds for a purchase, and even worse, the possibility of the Mistrys selling their stake to an investor who doesn’t share the group’s long-term vision.
The bad blood between the two sides started when Cyrus Mistry, 52, handpicked to be the chairman of Tata Sons Pvt. by Ratan Tata, 82, sought to reduce Tata Group’s debt, and in the process, threatened to undo the legacy of the conglomerate’s patriarch. The two families belong to the Parsi Zoroastrian community, which fled persecution in Persia centuries ago before finding refuge in western India. The Tata Group has been traditionally headed by a Parsi until 2017, when Tata brought in a veteran executive from outside the close-knit community to replace Mistry.
