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Shareholders Of Tata Sons


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A Promise Is A Promise


wealthymattersCredit Suisse had offered Tatas a financing package that helped it aggressively outbid its Brazilian rival for Corus Steel in the UK. Once the deal was done, two other MNC banks approached the company’s top brass with a more comfortable funding plan involving cost savings of about $400 million. As Tata Steel weighed in favour of the new funding option, Credit Suisse fetched up with a letter from the Tatas showing its commitment to $120 million in fees whether or not the financing was availed from it.Bombay House top brass was left fuming that a bank had the temerity to place a demand on them. But when the matter was taken up to the then group chairman Ratan Tata, his decision was simple: There was a commitment made to Credit Suisse which must be honoured. Having paid the European bank, Tata Steel went ahead with the cheaper financing option.

The Tata Way


wealthymattersHave you ever wondered what makes a business last many generations? If so, the Tatas can teach you some things.Tata began operating as a trading firm in 1868.Today,the business consists of round a 100 professionally managed companies. Read the essay below by Ratan Tata to get an idea of the attitude that builds multi-generational businesses:

“I believe it’s really important to have companies survive over the longer term. I hate to see major corporations disappearing from the scene because someone has cashed out, because the managers have been unable to escape their comfort zones, or because boards have not been sufficiently nimble to change with the times. When these things happen, decades of effort and innovation go to waste. It’s bad when businesses don’t fight it out, whether the enemy is a competitor’s new product, an industry-transforming innovation (such as transistors), or the impact of something clearly outside a company’s control (like climate change). Read more of this post

Create Value


wealthymatters‘If you honestly look to create value for customers, they will connect to you and trust you. Always strive for building the extraordinary, be it product, service or culture.’-Ratan Tata

Trust Issues


Controlling Your Wealth From Beyond The GraveHere’s a story from the past:Back in 1936, Shapoorji Pallonji Mistry (grandfather of Cyrus Mistry) acquired around 12.5% of Tata Sons after the death of FE Dinshaw, from his estate. Dinshaw had been a frequent financier for the Tatas and had converted debt to equity to get his shares in Tata Sons. He wanted his shares to go into a trust after his death, but somehow Shapoorji Mistry prevailed upon his managers.And then in a master-stroke Shapoorji acquired another 6% from JRD Tata’s brother Darab, who sold, it is said, to spite his elder sibling, who was hogging the limelight at the Tatas. But Shapoorji’s adventure had to stop there, as the sons of JN Tata Ratanji and Dorabji had already arranged their own holdings, adding up to 80%, into charitable trusts before their deaths. ( JRD and Darab were descendents of Dadabhoy Tata, a partner and cousin of JN Tata’s father Nusserwanji Tata.)

The Tata Trusts are probably the most well known in India.Using trusts, either charitable ones like these or private ones with private beneficiaries, was popular in India till the ’80s to bequeath assets to progeny. Between the 80s and the ’90s, private trusts went through a period of highest taxation and lost their popularity. Today, they seem to be the flavour of the season again. Along with popularity have come services that set up trusts and help manage them. Apart from the tax pressure on trusts being eased in early 2000, some high-profile inheritance drama helped. Read more of this post

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