Established Primarily for Opium and Tea Trade, This Holding Firm Now Surpasses Govt to Become the Biggest Promoter of Listed Cos

At the end of December 2020, India's Central government's stake in public sector undertakings stood at Rs 9.24 lakh crore or Rs.9.24 Trillion, which is 19.7% lower than the year-ago period. While, Tata Sons' stake in the listed companies of the conglomerate rose 34.4% on annual basis to Rs 9.28 lakh crore (or Rs 9.28 Trillion). And, this is where Government of India has lost the title of largest promoter of listed companies, reported Business Standard

At the end of the year 2020, Tata Sons surpassed the government to be the biggest promoter of listed companies.

A conglomerate of nearly 100 companies having several primary business sectors including chemicals, consumer products, energy, engineering, information systems, materials, and services, Tata Sons is the holding company of Tata Group and holds the bulk of shareholding in the Tata group of companies including their land holdings across India, tea estates and steel plants.

Notably, at the end of 2019 market valuation of government's stake in PSUs was almost 67% higher than Tata Sons' stake holdings in its group companies. Back in March 2015, Centre's stake in PSUs was two and a half times that of Tata Sons' holding in its companies.

Established in 1868, Tata Sons Private Limited was established as a trading enterprise to primarily engage  in the "that-time lucrative" opium and tea trade with Mongolia and China. The group then eventually moved to conduct businesses directly to becoming the principal holding company of Tata Group. About 66% of the equity capital of Tata Sons is held by philanthropic trusts endowed by members of the Tata family. 

It was  in late-1800s when the 'un-holy' opium trade was run by the East India Company, the powerful multinational corporation established for trading with the British royal charter that granted it a monopoly over business with Asia in pre-independence era of India. The British used the profits from the sale of opium to purchase such Chinese luxury goods as porcelain, silk, and tea, which were in great demand in the West.

The colonial British government's trade in opium devastated Indian farmers, a new research by Rolf Bauer, a professor of economic and social history at the University of Vienna, has found.

The Colonial Drug Trade

Through the dealings of the British East India Company, opium, traditionally used medicinally, became a non-medicinal business commodity during the late eighteenth and throughout the nineteenth centuries. 

At the time of growth and development of the opium monopoly in Bengal from 1773 to 1856, the economic condition of the poppy farmers (ryots) had deteriorated and tension had erupted between the local zamindars (landlords) and the colonial authorities. This conflict aided in the eventual uprising of 1857, also known as the Indian ‘Sepoy Mutiny’. In an attempt to further control the private cultivation of opium poppies and the free trade in opium, the government adopted the Opium Act of 1857 and the Opium Act of 1878.

Opium and Tatas

Tatas made his fortune on the back of the opium trade to China, a detail that is airbrushed out of the company history today, although the opium trade was legal at the time. 

House of Tata's also speculated to had its role in the financing of the British military expedition to Persia in 1856 and Abyssinia in 1867, which can be directly traced as the source of J. N. Tata's first venture into the cotton textile industry.

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