Indian billionaire Pallonji Mistry has about 85 per cent of his estimated $19.9 billion (Dh73.09 billion) fortune locked up in a legal battle with India’s largest conglomerate.
The conflict between Mistry and the Tata Group began with a boardroom coup in 2016, when the former’s son was ousted as chairman of the latter. The 89-year-old Mistry is one of the largest shareholders in Tata Sons Ltd., which controls the $100 billion conglomerate, and his family has since filed numerous lawsuits against the holding company’s board, alleging suppression of minority interests and governance lapses.
The courtroom battle has continued, most recently focused on a move by Tata Sons to restrict shareholders from freely selling their stake — a change recognised by the government this month. Mistry, who derives an estimated $16.9 billion of his fortune from his 18.4 per cent equity in Tata Sons, can no longer sell those holdings without the approval of a board his family has been fighting for two years.
While Tata Sons has always been a closely held private entity, it was considered a public limited company due to its size under an old legal provision. That allowed investors greater flexibility in transferring their shares, according to Daizy Chawla, senior partner at law firm Singh & Associates.
The law was altered some years back, allowing Tata Sons’s shareholders to approve a change to its legal status last year, overriding objections from Mistry’s son.
“Being a private company there is now restriction on the free transfer of shares by its shareholder and the transfer needs to be done with the approval of the board of directors,” Chawla said.
A New Delhi court last week heard arguments on a plea to put on hold government approval of Tata Sons’s conversion. The dispute may eventually wend its way to India’s top court since the losing party will have the right to appeal.
The discord has battered a relationship that goes back almost a century. A Mistry company had financial links with Tata Sons from as early as 1927, though the family only began acquiring equity from the 1960s onward. Over time, purchases from Tata family members and a rights issue grew their holding to the present 18.4 per cent.
Mistry inherited the stake from his father. The Shapoorji Pallonji group, founded in 1865, has helped build some of Tata Group’s automobile factories and steel mills and is also responsible for some of financial capital Mumbai’s most iconic structures, including the Reserve Bank of India buildings and the Tower wing of Taj Mahal Palace hotel.
After earning a reputation for being reclusive, Mistry and his family were thrust into the spotlight in 2012, when his younger son was chosen to helm the Tata Group. The bonhomie ended with his son’s ouster in October 2016, which triggered one of India’s worst corporate showdowns.
Still, it’s the exposure to Tata companies that’s helped bump up Pallonji Mistry’s fortune by $2.5 billion this year as investors piled into Tata Consultancy Services Ltd., Asia’s largest software services provider. Mistry ranks 44th on the Bloomberg Billionaires Index and is among the richest men living in India.