The chosen one

"I have been impressed with the quality and caliber of his participation, his astute observations and his humility. He is intelligent and qualified to take on the responsibility being offered and I will be committed to working with him over the next year to give him the exposure, the involvement and the operating experience to equip him to undertake the full responsibility of the Group on my retirement,” noted Ratan Tata on November 23, 2011. Tata was referring to 43-year-old Cyrus Pallonji Mistry, the newly appointed deputy chairman of the Tata Group. Ending 15 months of suspense and intense media speculation, the board of Tata Sons, the holding company of the Group, had issued a press release naming Mistry as Ratan’s successor on the unanimous recommendation of the selection committee. Mistry will work with the present incumbent and take over as chairman of the conglomerate, India’s largest by revenue (which totaled $83 billion in 2010-11), when the latter retires on turning 75 in December 2012.

Terming the appointment a "good and far-sighted choice,” Ratan Tata noted that Mistry has been on the Tata Sons board from August 2006. A week after being made deputy chairman, Mistry was inducted into the board of Tata Industries, the second biggest holding company, which mainly promotes the Group’s foray into new businesses.
A graduate in civil engineering from Imperial College, London with a master of science in management from the London Business School, Mistry was a surprise choice. His name had not figured among the list of probable candidates industry experts and the media had been dissecting for months! Ratan’s half brother Noel Tata, international corporate heavyweights like Indra Nooyi, chairperson and chief executive officer (CEO) of PepsiCo, Arun Sarin, former CEO, Vodafone Group and others had been rumored to be in contention. (Noel Tata reportedly became aware of his brother-in-law’s appointment while watching a television screen at Delhi airport. Tata is married to Cyrus’ sister, Aloo – editors).

Cyrus Mistry (top and above): upholding tradition and Tata values as the new chairman

Mistry is currently managing director (MD), along with his older brother Shapoor, of the Shapoorji Pallonji (SP) Group which, like the Tatas, has a legacy of well over a century and an international footprint, though it is substantially smaller in scale and size. With 23,000 employees and a Group turnover of $2.5 billion, SP is one of India’s oldest and most respected private enterprises with interests in construction, real estate, infrastructure, energy, fabrication, shipping and logistics, etc. Cyrus is one of the four children (two sons and two daughters) of billionaire industrialist Pallonji S. Mistry who owns an 18 percent stake in Tata Sons, making him the largest single shareholder next to the Tata Trusts. In a separate statement Cyrus Mistry said that he will "legally disassociate” himself from the management of his family businesses to avoid any conflict of interest. He was originally a part of the selection committee appointed to choose a successor, but recused himself when his name was suggested by the other members. The deputy chairman said he was "deeply honored” and he was aware that an "enormous responsibility, with a great legacy, has been entrusted” to him.
Mistry will be the sixth chairman in the Tatas’ 143-year history and the first non-family member, with all the earlier chairmen being directly or indirectly related to the founder Jamsetji Nuss­erwanji Tata. Jamsetji had his son Sir Dorab as his successor, followed by Sir Nowroji Saklatwala and Jehangir Ratanji Dadabhoy (JRD) Tata who was at the helm for 53 years. Ratan Tata took over from JRD in 1991. The tradition of every incumbent being born a Parsi has been maintained. The fact that Cyrus is a Parsi, or that he is from Bombay had nothing to do with his selection, lawyer and long-time Tata associate Shirin Bharucha, who represented the Tata Trusts on the selection committee, told television news channel NDTV in an exclusive interview. She emphasized that he had been chosen purely on merit and that it would not have been right to exclude from consideration a suitable candidate just because he was originally a part of the selection panel.
Like his predecessor, Mistry is known to be low profile, steering clear of socializing and media limelight. "I am very happy and impressed at the choice of the selection committee,” Tata stalwart and former Tata Sons director Jamshed Jiji Irani told television anchors in an interview from his retirement home in Jamshedpur. Ratan shares good chemistry with Mistry, he added, and the appointment would be "good for the house of Tatas and for Indian business,” with the future chairman’s youth giving him ample time to "stamp his personality and authority” on the Group which has 98 companies and more than 400,000 people in 80 countries in its fold. Presently, several of the top Tata companies’ chief executives, like the new deputy chairman, are in their 40s, in contrast to earlier trends.

The Mistry family (back row, from left): Shapoor, Cyrus Pallonji and Rohiqa with Firoz and Zahan;

As far as his entrepreneurial legacy is concerned, Mistry seems to the business born! His grandfather, Shapoorji Pallonji Mistry, was born in 1889 into a humble middle class family which had a dozen children! His first construction contract was the building of the Girgaum Chowpatty footpath, on which he and his father made a princely profit of Rs 2,000! When his father died in 1921, the young man went on to form his own company called Shapoorji Pallonji Construction Company Private Limited, as per the family’s history compiled by former Bombay municipal commissioner Jamsheed Kanga and published in the compilation Enduring Legacy: Parsis of the 20th Century edited by Dr Nawaz B. Mody.
Through business acumen and enterprise, Shapoorji made his mark on the construction scene, particularly in Bombay, with several landmark buildings like the Bombay Central train terminus, the Hongkong Bank, Dhanraj Mahal, the Cricket Club of India, etc. "Fortunately, Shapoorji had a worthy son in Pallonji whom he had groomed well and would be relied upon to continue and expand the work,” writes Kanga. Pallonji (Cyrus’ father, the current chairman of the SP Group) internationalized the business with forays into the Middle East and elsewhere. Pallonji was also on the Tata Sons board and was chairman of The Associated Cement Companies and a director of the Union Bank of India, the Bombay Dyeing and Manufacturing Company Limited, the W. H. Brady Group, etc, as per the SP Group website.
Pallonji, now 82, continues as chairman of the Group, with Shapoor and Cyrus hitherto in charge of the different companies. Shapoor, 47, has spearheaded the Group’s real estate business and is also the chairman of Forbes and Company Limited, Gokak Textiles and Eureka Forbes. He is also on the board of The Indian Hotels Company (part of the Tata Group) and several other companies.

(left to right): Homa and Aban Petit, Shapoor, Pallonji, Patsy and Cyrus Mistry, Hector Mehta and Zarir Bhathena

Cyrus joined the board of Shapoorji Pallonji and Company in 1991 as a director and was appointed MD of the SP Group in 1994, as per his bio data released by the Tatas. "Under Mistry’s guidance, SP’s construction business has grown from a turnover of $20 million to approximately $1.5 billion. The Group’s companies have evolved from pure construction to executing projects under design and build and EPC (Engineering Procurement and Construction) delivery methodologies, implementing complex projects in the marine, oil and gas, and rail sectors… The Group’s international construction business now extends to over 10 countries… Mistry is responsible for launching the infrastructure development vertical in the SP Group… (their) recent foray into agriculture and biofuels, with the leasing of 50,000 hectares in Ethiopia, was also overseen by Mistry,” the release adds. Mistry’s older brother Shapoor will now be in charge of operations at the SP conglomerate.
Currently, Cyrus is reportedly dividing his time between Bombay House, the Tata headquarters at Fort, and SP Centre at Colaba to facilitate a smooth transition of all divisions to Shapoor. As per press reports, both brothers and their father are Irish nationals, with Pallonji’s wife Patsy (née Dubash) being born in Ireland. Pallonji figures on the Forbes list of billionaires, with an estimated wealth of $8.8 billion.
Though not a Tata, Cyrus’ connection with the Tatas is not only through the substantial shareholding but also through his sister, Aloo Tata. Cyrus’ wife Rohiqa is the daughter of eminent lawyer Iqbal Chagla and they have two sons. The challenge afore the chairman-to-be is to command the respect of the Group’s numerous top executives and continue what is known as the "Tata culture,” where profit is deemed not to be the only priority. Commitment to CSR (corporate social responsibility) and philanthropy are a given, Bharucha had emphasized in the NDTV interview. Ratan Tata, she added, will continue to be the chairman of the various Tata Trusts.
Commenting on the succession in an analysis posted online on November 25, The Indian Express noted: "Promoters (in Indian companies) still retain too much power and succession and ownership are too often closed affairs… Tata Sons’ choice to professionalize the succession process — a declared retirement, a two-year transition period, a one-year mentorship — will hopefully be emulated elsewhere.”