New Delhi | Updated: June 29, 2022 7:31:53 am
THE LAST years of construction and real estate magnate, Pallonji Mistry, 93, were indeed unfortunate. Ill health rendered him incommunicado, and his sons, Shapoor and Cyrus, who rashly dared to take on a behemoth like the Tatas, could not benefit from his usually sage and considered advice.
Like his legendary father, Shapoorji Pallonji Mistry, Pallonji, beneath his soft spoken, unassuming exterior, was a hard-nosed businessman and a very shrewd investor.
His father was an inspiring rags-to-riches story, whose construction firm, Shapoorji Pallonji Construction Private Limited, founded in 1865, played a major role in shaping Mumbai’s skyline. The landmark buildings executed by SPCL include the RBI building, Bombay Central Station, The Taj Hotel extension, Shanmukhananda Hall, Tata Institute of Fundamental Research, Homi Bhabha Auditorium, Breach Candy Hospital etc.
In the early 1970s, when India was still a closed economy, Pallonji looked overseas to expand. He built the ceremonial palace in Muscat for the Sultan of Oman and later executed many large projects in Abu Dhabi, Qatar and Dubai.
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At a young age, Pallonji also advised his father to branch out beyond the construction business. Pallonji’s diversification of the construction firm included purchasing shares in major Mumbai business houses including Associated Cement Companies, Nowrosjee Wadia and Sons, the Brady Group, Special Steels and United Motors, all of which were later disinvested.
The most prized asset in the Mistry share portfolio was, of course, its 18.37 per cent in Tata Sons, the controlling company of the mighty Tata Group. The shares were purchased in three different lots from JRD Tata’s two siblings and the Sir Ratan Tata Trust in the 1960s and the early 1970s.
The Tatas, always a mite suspicious of the Mistrys’ motives, kept Pallonji at a distance for many years. It was only in 1980 that JRD Tata grudgingly agreed to make Pallonji a director on the Tata Sons board. As a director, Pallonji made it clear that he would abide by the decisions of the Tata management.
Pallonji never interfered, never challenged, never sought any power and was nicknamed the “Phantom of Bombay House” for his silent presence. (Bombay House is the headquarters of the Tatas.) In 2003, he took Irish citizenship and automatically became the richest man in Ireland.
When Pallonji retired from the Tata Sons board in 2005, his younger son Cyrus was invited to join the board. When Ratan Tata retired in 2012 as chairman of the board, Cyrus was appointed in his place, though many in the media had speculated that Ratan’s half brother, Noel Tata, who also happens to be Pallonji’s son-in-law, would be selected for the top position.
Unfortunately, once Cyrus took over the chairmanship of the group, the relationship between Ratan Tata and him slowly deteriorated and, on October 24, 2016, Cyrus was unceremoniously removed as chairman without any notice. The Mistrys appealed to the National Company Law Tribunal (NCLT) on the grounds of unlawful termination and suppression of minority shareholder rights. The ding-dong legal battle stretched over several years.
Finally, the Supreme Court, in 2021, ruled decisively in favour of the Tatas. The court held that a private company is not subject to the same norms of good governance as public and listed companies.
The Mistrys were badly affected by the confrontation with the Tatas. The family lost huge revenues that they traditionally enjoyed through their dealings with the group. The complicated litigation was expensive and time consuming. The economic downturn affected the construction and real estate market and the SP Group, like others in this business, took a big financial hit during Covid.
Nevertheless, by 2022, the Shapoorji Pallonji Group had cleared a major portion of its outstanding debts by selling its entire stake in Eureka Forbes and Sterling and Wilson Renewable Energy companies. The family also put some Rs 5,100 crore of its own money into the holding company. However, a question mark remains over the worth of the family’s proudest possession, its 18.37 per cent stake in Tata Sons. It is still unclear if it is possible for the Mistry family to monetise its shares without the permission of the Tata Sons board.
In 2022, for the first time in decades, Shapoorji Pallonji Mistry was no longer listed by Forbes magazine as one of the ten richest men in the country.
(The writer is the author of The Tatas, Freddie Mercury and Other Bawas.)
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