Tata Vs. Mistry: Why Nusli Wadia’s Move Caught Ratan Tata Unawares 

Excerpted from ‘Tata vs Mistry; The Inside Story’, by Deepali Gupta, published by Juggernaut Books.

It wasn’t just Cyrus Mistry who was removed from the Tata Group company boards. The shareholders of Tata Steel, Tata Chemicals and Tata Motors voted Nusli Wadia out too. The notice to remove Wadia came on the day he had convened a meeting with some independent directors.

It all started when Wadia spoke in favour of Mistry at the Tata Chemicals board meeting.

After the board meeting, in which Mistry was retained as chairman, according to senior executives and board members of Tata Steel, meetings were held by Wadia to discuss how to support Cyrus Mistry further. Wadia had been on the boards of Tata Steel for over three decades and Tata Motors for about two decades. Though Mistry was sacked as chairman of Tata Steel, he retained the position at Tata Motors.

The Tata Group’s retaliation against Wadia was more acute perhaps because Ratan Tata felt betrayed by a friend and ally, or perhaps because Wadia had the power to sway other decision-makers. Either way, the move to sack Wadia himself from the boards was put in motion and it was decided that this matter, too, would be taken to the shareholders at the extraordinary general meetings.

Nusli Wadia loves a good fight. He fought for his business when he was twenty-six. He has litigated for possession of this home. He has litigated and won when he was accused of being a Pakistani spy, on account of being the grandson of Muhammad Ali Jinnah. It took some boardroom and shareholder mobilization for him to buy biscuit maker Britannia. When Ratan Tata became the chairman of Tata Sons, Wadia fought to establish Tata against the satraps of the group. He continues to fight to secure land left in FE Dinshaw’s estate as the trustee of Dinshaw’s trust. He was now fighting once more in Tata’s boardrooms. Perhaps not as much for Cyrus Mistry as for his lifelong habit of taking a stand. ‘He isn’t fighting for Mistry . . . there is no special love for Mistry,’ points out a lawyer. ‘He’s fighting for a principle.’

Wadia started his business career with a battle. He returned after completing his education in England, to join Bombay Dyeing, his father’s business, in the late 1960s. In 1970, his father told him, he was selling the firm to settle overseas.

His father, Neville Wadia, backed by Pallonji Mistry, wanted to sell Bombay Dyeing & Manufacturing Co. Ltd., to RP Goenka, and planned to retire overseas. Young Nusli, who intended to expand the Wadia empire, was determined not to allow this to happen. He swung into action, and relied on advice from his godfather, JRD Tata. He mopped up shares from his mother and sisters, and stirred up the employees of the group into action. The employees forked out capital to buy shares, and blocked the deal with Goenka in support of Wadia. With that Wadia became the leader of Bombay Dyeing from the get-go – he didn’t work his way to the top like other Parsi business scions. With JRD’s help Wadia was able to assert his control over Bombay Dyeing and other Group companies.

When JRD was due to retire in 1991, Wadia, then forty-seven years of age, was even considered a potential successor to him. But, it was rumoured, that some years earlier, when it came to inducting Wadia on the Tata Sons board, Pallonji Mistry refused to allow it. So instead JRD appointed Wadia to the Tata Steel board in 1979 and the Tata Chemicals board later.

When JRD chose Ratan Tata to succeed him, Wadia supported his mentor’s decision. Ratan Tata had worked on the shop floor and had risen over the previous decade assuming various roles at most major Tata companies including TCS. Boardroom wizardry was not quite his forte back then. He was generally retiring, little known and considered weak in front of stalwarts such as Russi Mody, Darbari Seth and Ajit Kelkar. Word on the street was that these strong operational heads of Tata group companies would soon marginalise Ratan Tata.

A magazine even called Nusli Wadia the corporate samurai of Ratan Tata. In fact, when Darbari Seth exited Tata Chemicals, it was seen as a personal victory for Wadia who helped edge him out. After the boardroom coup to overthrow Russi Mody, Wadia was rewarded with the post of vice president on the TISCO (now Tata Steel) board. Of course, at the time Wadia denied any prior knowledge of the impending reward. Tata and Wadia were often seen together, both professionally and socially. Friends of both the men say that Wadia may have expected a seat in the Tata Sons board at some point but this was never given to him. Ratan Tata instead nominated Wadia to the Tata Motors board in 1998.

Indeed Wadia was a close professional ally of Ratan Tata’s. In 1997, Indian Express published illegally tapped phone conversations of Wadia. In those conversations, Wadia was heard lobbying for Tata Tea in Assam. The conclusion drawn by many from the tapped conversations was that Wadia shepherded Ratan despite Wadia’s businesses being significantly smaller than the sprawling Tata Group. The tapped conversation led to some distance between Ratan Tata and Nusli Wadia. A Times of India report observed it was the first time in years that the two industrialists were not seen together at any major social event. Several people close to them say, though, that the drift was only for show.

In 1999, when Atal Bihari Vajpayee became prime minister, Wadia started spending more time in New Delhi. He had forged relations with Vajpayee and LK Advani over the years. People close to both Tata and Wadia believe this was when the two really started to drift apart.

Deepali Gupta is a senior financial journalist.

The views expressed here are those of the author, and do not necessarily represent the views of BloombergQuint or its Editorial team.