Monday’s letter by Wadia group chairman Nusli Wadia, who is also an independent director on board of Tata companies, asking the Tatas to withdraw defamatory charges made against him, has put the centuries old close business relationship between the two Parsi families in a tight spot.
Incidentally, it was Nusli Wadia – also known as a corporate samurai - who guided Ratan Tata during the latter’s initial years as Tata group chairman, as he fought rebellious satraps including the dominating former Tata Steel chairman Russi Mody, Tata Chemicals chairman Darbari Seth and former Indian Hotels head Ajit Kerkar.
“In fact Wadia was an informal adviser to (Ratan) Tata when he (Tata) took on these mighty stalwarts and ousted them. It is ironical that Wadia and Tata are now fighting,” said an industrialist familiar with both the groups.
In the ongoing boardroom battle for control of the Tata group, Tata Sons, the holding company of the Tata conglomerate, had accused Wadia of acting in concert with ousted Tata chairman Cyrus Mistry and in rallying together independent directors to endorse Mistry’s leadership.
This has been strongly contested by Wadia in his late Monday letter to the Tata Sons board where he asked the Tatas to prove the charges or face action.
“It appears to becoming less of a legal issue and more of an ego issue,” says Hemant Sahai, managing partner, HSA Advocates. “As an independent director, Mr Wadia should maintain a balance. But it now appears he is taking sides. The Tatas will obviously want to continue their efforts to remove him as director.”
While there may not be much of a legal battle between the Wadias and the Tatas, the differences will certainly dent the camaraderie that the two business families shared. Wadia has been friends with Ratan Tata since childhood and used to consider late chairman JRD Tata, as his godfather and mentor. It was JRD Tata who had helped Wadia when Nusli wanted to acquire control of his family company Bombay Dyeing.
The relationship between the Wadia and the Tata families is linked to the history of Indian business, dating back to the nineteenth century when Indian businesses grew in the form of clusters via close relationships among large Parsi families such as the Tatas, Wadias, the Godrejs, Camas, Jeejeebhoys, Dadabhoys, Readymoney, Petit, among others.
While the Wadias’ forte lay in ship-building – an industry that the Zoroastrians were famous for – there was a symbiotic relationship that they shared with the Tatas who were into manufacturing.
There are various books that talk about the way large old Parsi business families together developed India’s trade with other countries. In ‘Parsis in India and the Diaspora’ edited by John R Hinnells and Alan Williams, the growth of businesses in India such as cotton, jute, indigo, timber, ship-building and manufacturing is closely linked to the community.
Those close links are now threatened with this latest corporate battle as the two sides prepare for an eventual contest. Wadia, 72, is known for his tenacious ability to fight as was displayed in his famous corporate battles in the nineties with tycoons including late Reliance founder Dhirubhai Ambani and Rajan Pillai of Brittania.