The TLDR: The Tata Group has been embroiled in a four-year soap opera ever since Ratan Tata ganged up with other board directors to oust then chairman Cyrus Mistry in 2016. The Mistrys and the Tatas—joined in marriage and business for over 70 years—have been feuding in court ever since. That khandani maha-yudh finally came to an end yesterday, as did the long storied relationship between the two families—with Ratan Tata emerging as the undisputed winner.

We dive into the history of the Tata-Mistry sambandh and offer context to this historic breakup.

The Tata bijness, a quick recap

The Tata Group: Founded in 1868, the $110 billion business is most often described as a “salt-to-software conglomerate”—whose 28 companies are involved across every sector, ranging from tech to hotels to automobiles. 

• The apex company in the Tata Group is Tata Sons which holds a controlling stake in these companies, and oversees their operations. 
• In turn, Tata Trusts holds a 66% stake in Tata Sons, and oversees its board.
• The present Tata Sons chairman is N Chandrasekaran—the first non-Parsi outsider to lead the Tata Group.
• Ratan Tata is the chairman of Tata Trusts.

The grand old man: Ratan Tata is one of the most revered icons of India Inc. Over a historic 21-year career as chairman—from 1991 to 2012—he took the Tata Group to dizzying heights. Under his leadership, the Tata empire’s profits grew 50x—and he executed a number of splashy mergers including the acquisition of Land Rover Jaguar and Tetley Tea. He is often described as the "Chairman of Corporate India". 

The exiled heir: Cyrus Pallonji Mistry trained as a civil engineer in Imperial College. He has worked most of his career at the Tatas and his family business. The two families, however, have a longstanding business and personal relationship: 

• There is no established account of how the Mistrys hitched their fortunes to the Tatas. The Economic Times claims that JRD Tata’s younger brother, Dorab, sold his shares in a fit of rage to Shapoorji Pallonji Mistry. 
• A Tata Group insider claimed that Mistry got the shares in 1936 when he bought out a company that owned equity in Tata Sons. But A 2003 letter written by the Mistry group says they first bought shares only in 1965—from JRD’s sister Sylla. 
• Cyrus is the younger son of Pallonji Mistry who now heads the Shapoorji Pallonji Group. It now holds an 18.37% stake in Tata Sons, and is its single minority shareholder. 
• Also: Cyrus' sister is married to Ratan Tata's half-brother Noel. 
• Interesting fact: Pallonji and his two sons hold an Irish passport—and are the richest family in Ireland. The Mistrys are among the ten richest families in India—with a net worth of $16 billion. Mistry senior is alone worth $11.4 billion.
  
  

The Tata v Mistry maha-yudh

Mistry’s rise and fall: Here’s how the heir apparent became the black sheep:

• In 2011, Cyrus Mistry was made deputy chairman of Tata Sons—with the explicit understanding that he was being groomed for Ratan Tata’s job.
• In 2012, Tata retired and Mistry took his place as chairman of Tata Sons. But things went south between the two men fairly quickly. 
• Mistry was forced out in 2016 in a surprise Tata Sons board meeting—and Ratan Tata replaced him as its interim chairman.
• Among the reasons offered by Tata: the $5 billion dip in the group’s value over the course of just one year, 2015-16. 
• The reasons offered by Mistry: He was forced to leave because he “had confronted and was grappling with serious governance problems and ethical issues for a considerable period of time."
• At the time, most observers viewed the ouster as an “internal culture clash” between the old guard and the new. Mistry wanted Tata to lay off, and he simply refused to let go.
• In January 2017, Tata quickly replaced Mistry with Chandrasekaran—and converted Tata Sons from a publicly held company to a private enterprise that September. 
• The reason: The Mistrys would now require the board’s approval to sell their shares, despite being the biggest single shareholder. (FYI: This is key to the current battle)

The legal drama: that followed unfolded like this:

• Mistry filed a suit challenging his removal in the National Company Law Tribunal (NCLT)—which dismissed Mistry’s claims in fairly damning language. 
• Mistry appealed that ruling in the appellate tribunal (NCLAT)—which issued an astonishing reversal in December. 
• It declared the appointment of Chandrasekaran illegal, and ordered the reinstatement of Mistry as chairman. It also held that the move to convert Tata Sons into a private company was “illegal.”
• Tata Sons appealed the decision in the Supreme Court—which granted a stay on the order in January.

The battle that won the war

The Tatas finally won the war thanks to the coronavirus. And here’s how.

The pandemic effect: The Mistrys’ family business—The Shapoorji Pallonji Group—is a construction and engineering giant. It is inevitably reeling from the economic collapse triggered by the pandemic—and in desperate need of money. So the Mistrys decided to raise Rs 110 billion to save its empire by pledging part of its 18.37% Tata stake—and entered into a deal with a Canadian investment firm to raise Rs 37.5 billion.

The killer move: The Tatas filed a petition in the Supreme Court to block the deal. Their reasoning: Since Tata Sons is a private limited company, the Mistrys must offer to sell their shares to other shareholders—who have the first right of refusal.  

The ruling: Yesterday, the Supreme Court delivered the fatal blow. Chief Justice Bobde ordered the parties to “maintain status quo regarding the transfer and pledging of shares already made.” He also postponed the hearing of the final arguments on the petition to October 28.

The surrender: The Mistrys then issued an unexpected statement throwing in the towel—and announced “a separation of interests.” Translation: We will sell our stake to the Tatas. The media release also included a detailed complaint about the Tatas and the performance of the group under their leadership—which you can read here.

Coming next: Maha-yudh 2.0

What the Mistrys expect: But the spoils of war may not belong entirely to Ratan-ji. The Tatas now have to buy out the Mistrys’ hefty stake. And they expect to receive Rs 1.78 trillion—based on a valuation of Tata Sons at Rs 9.7 trillion (or Rs 2.4 crore per share). This includes both Tata companies that are listed on the stock exchange—and have a publicly available valuation—and those that are unlisted. As The Telegraph notes:

“The estimate… includes the ‘intangible’ value of the Tata brand which has been estimated at Rs 1,46,000 crore. Ratan Tata had pioneered a system in the mid-nineties under which group companies had to pay royalties to the holding company for the use of the Tata brand name.”

What the Tatas will give: But the Tatas may not play ball—and use the Mistrys’ cash crunch to push down the valuation. Indian Express says it has “reliably learned” (from the Tatas, no doubt) that the company’s Articles of Association states:  “[I]f any shareholder of Tata Sons wants to sell his/her shares, then he has to first offer it to Tata Sons. Tata Sons will then decide a fair market value and offer it to the shareholder.”

Up next: A bruising battle over the definition of that “fair market value.”

Reading list

The Telegraph and Business Standard have the most details on the breakup. Economic Times has a juicy reported read from December on why Cyrus and Ratan fell out. Quint explains how the Mistrys entered the Tata khandaan. Business Insider offers a personal profile of Cyrus Mistry. Mint looks at the options available to the Tatas—including bringing in an outside investor.