Sit back and enjoy the Tata opera as it unfolds

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Ratan Tata’s return and Cyrus Mistry’s sacking are stories the Indian corporate stuff is made of. We wait with bated breath

The removal of Cyrus Pallonji Mistry as the head of Tata Sons is news beyond boundaries.

Business, however, in India, has taken a fresh turn with this kind of move. Let us get some fundamentals right. There is no such thing as the Tata family, anymore, in the conventional terms of Indian business.

This is not the best place to get into the pedigree and family tree analysis. However, the first significant break in the family tree continuum took place with the succession of Ratan Tata to the chairmanship of the Tata Sons board. JRD did not have a biological successor. Ratan Tata himself never married. This, therefore, was itself a significant departure in the succession pattern of family businesses.

Consider the major family houses in India. Without naming the significant ones, the succession has almost always been by blood groups of biological descent, following the law of primogenitor. Sitting on the board of a major business family which had been successful for over 70 years, when I raised the issue of investment and diversification, the octogenarian chairman and the head of the group had no hesitation in putting his foot down. His argument: “We do not have any adult male ready and available in the family to lead such a new enterprise.” The approach was simple and disarming. It was symbolic of a fairly representative mindset in business.

Often, Indian businesses have spawned new units to provide employment to adult males of the dominant family. In the case of untimely demise of an adult male, the succession has gone in the wife’s favour (if the next generation was not yet old enough for the task).

This pattern of running business cuts across all religious effluence and touches Hindus, Christians, Muslims, Sikhs — the list can go on. The stamp of the so-called Indian culture is large. It would be  dangerous and controversial to offer an opinion. However, business has a knack of taking its own direction, very much in the same manner as the water-flow takes its own course.

Consider the case of  Tata Sons. It is no secret that the related family members of the Tata stock have control of Tata Trusts. Tata Trusts in turn controls over 60 per cent of investment in Tata Sons. The power equation is clear.

Obviously, the modernised educated commentator would see this in his framework of reference.

He would talk of ‘shareholders’ and ‘the board’. He will talk of the investors and the executive control. The basic reality, however, is one of, a family group confronted with power in the hands of a non-family group. The key players of Tata Sons were confidants of the chairman and not necessarily in a kinship relationship. This must be a very unusual situation to the kind of networks systems which operated the group of Tata Trusts. It’s a tell-tale situation. There are other unique elements that are interesting.

Quite rightly, beginning with Jamsetji Tata, the group acquired a halo of high ethical values and for its strong espousal of the national cause. The Tata story rolled on for a 100 years till the family found a person in the extended family networks based on marriages, with an Irish citizenship, to head Tata Sons. Getting the Indian citizenship required one year of uninterrupted residency in India. This would be clearly impossible for any individual in that segment of the elite and ruling class.

The rest is history. There are other elements in the Tata conglomerate. In the last few decades, some sordid truths started surfacing, and one could with reasonable truth argue that Tata Sons had all the weapons in its arsenal of business which any business group in India has had. This included liaison with lobbyists and land acquisition cases which  courts find unacceptable.

Clearly, these cannot be the reasons for the sacking of Cyrus Mistry. Theses cannot be the reason for the return of Ratan Tata either. The story is still unfolding. Desperate attempts are being made by some quarters to give a modern spin to explain the business twists of a very conventional and average frame of reference.

The episodes are inconclusive. The story line will be taking its own course.

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