The
most prestigious name in Indian business scenario has called it a day.
Ratan Naval Tata passed on the command of the Bombay House to Cyrus
Mistry as he decided , at the age of 75.
He
had retired a decade back in 2002, at age 65, when the company decided
to make him a non executive chairman of the Tata Group, thereby
rendering him eligible to continue for five more years. When that time
elapsed, the retirement age was again extended for five more years.
Ratan, the jewel for the Tata group was indispensable, undoubtedly.
Educated
at Cornell, he would have stayed back in USA as he had an offer from
IBM. But JRD Tata’s nephew and group chairman Naval Tata’s son was
destined to be a part of the family business. He joined the family
business in 1962, as one of the several thousand shopfloor employees at
Tata Steel in Jamshedpur.
It
would be nearly a decade when he would get something ,as he was put
incharge of the troubled Nelco (National Radio and Electronics) in 1971
which had shown losses as high as 40%. Unfortunately for him, when he
had just turned around the scenario, emergency was declared, and with
labour issues, Nelco was back to square one. His next assignment was to
help revive the sick Empress mills. He had that, but was refused the Rs
50 lakh necessary for its revival. The mill finally closed down in 1986.
Ratan Tata’s criticism’s grew, and his baiters led by Russi Modi blamed Nelco’s and
Empress mills’ collapse on him , conveniently ignoring that both had
been caused mainly by factors which were beyond his control. The
criticism grew to a new level when JRD stepped down as the chairman of
the group in 1981 and named Ratan as his successor, as his detractors
thought that but for the Tata surname, he was not worth much.
Ratan
Tata drew up a new strategic plan in 1983, anticipating expansion of
capital markets. His plan emphasized on venturing into high tech
businesses, focusing on select markets and products, mergers &
acquisitions. He promoted seven such companies in the same decade:- Tata Telecom, Tata Finance, Tata Keltron, Hitech Drilling Services, Tata Honeywell, Tata Elxsi and Plantek. But
his plans found a cold response in many of the group companies, most of
whom were run as defacto independent units. All the progresses in them
were made independent of him.
In
1988, he tookover as Telco chairman, amidst the worst labour dispute in
Tata’s history. He stood firm and the dispute was resolved in the
company’s favour. Three years later, he He implemented the retirement
age rule for the board of directors and business heads, and this took
care of many of his detractors. The economy opened up in 1991, and his
peers at Bombay house were not very enthusiastic about this new change
which took away the protectionist policies of more than four decades.
He
drew a new plan in 1991 in place of his old plan.He gave prominence to
technology, and made global competitiveness the motto. McKinsey group
was hired for reorganization. Multiple, overlapping group companies were
brought in under one roof, and by 1998, there was a
single group logo and Tata belonged to Tata Sons, who now held the sole
authority on the use of the brand name.
Tata
exited from its once established sectors like cement, textiles,
pharmaceuticals and cosmeticsNew businesses were entered into viz
telecommunciations, finance , retail and preference was given to IT and
renewable energy. Today, TCS is the most profitable company in the IT
sector.
Tata
Group's global expansion started in 2000 with the acquisition of
Britain's largest tea firm, Tetley, by Tata Tea, now called Tata Global
Beverages.From 2000-10, more than USD 18 billion was spent to acquire
more than 22 companies worldwide . Tata Steel also acquired Europe's
second largest steel maker Corus in 2007 for $12 billion. The company is
now called Tata Steel Europe. These acquisitions also
include of controlling stake in government-run Videsh Sanchar Nigam Ltd
(VSNL) by Tata Sons, purchase of heavy vehicles unit of Daewoo Motors in
South Korea by Tata Motors, acquisition of Singapore's NatSteel by Tata
Steel and purchase of New York-based The Pierre hotel by Indian Hotels
Company. Jaguar Land Rover, a personal favourite of Ratan Tata since his
young days was acquired for $ 3 billion.
Before
him becoming the chairman, less than 5% of Tata’s earning came from
overseas. Today, it is the largest Indian multinational conglomerate;
more than 65% of its income comes from overseas . Tata group has, till
now 98 operating companies spread across 56 countries in six continents.
Tata Group's market capitalisation, which has some 30-odd listed
companies, is now nearly Rs.4.54 trillion ($825 billion), 33 times more
than in 1991 when Tata took over the top job. During this period, the
group's aggregate sales have increased 43 times, while net profit has
grown 51 times.
In 2008, he was awarded India’s second-highest civilian award, the Padma Vibhushan.
He
has not been without controversies, namely various environmental issues
flouted by the group in case of the port at Dharma (Orissa), which is
near protected wildlife areas.Or about the Nano plant withdrawal from
Singur, WB and going to Sanand , owing to farmers protest over
inadequate compensation for their land.
What
makes him so different than other Indian businessmen who began in the
license permit era? The very fact that he turned the biggest relic of
the license permit raj into a global company in little more than a
decade. On other hand, where behemoths like Birla could not stand the
changed business scenario and promptly broke up into little factions,
Tata grew beyond its wildest dreams, acquiring overseas businesses, a
fact which would have been impossible for any Indian enterprise for most
of the 20th century. On one hand where he acquired luxury
brands like Jaguar Land Rover, he also strived for the development of
the world’s cheapest car, Nano and the first car designed in India, the
Indica (which has been Tata Motors biggest success till now, and still
going strong). On one hand where Laxmi Mittal’s takeover of Arcelor is
still causing problems, Tata’s bid for Corus hardly raised any concerns,
speaks about the goodwill the group has built beyond India’s borders.
Most of his now hailed successes, like the Corus and Jaguar acquisition
were predicted to bring the company’s doom and bankruptcy. But he spent
no time in proving them right. Because after all, Tata
has been among the very few to perfectly understand the pysche and the
needs of the Indian consumer -- and build successful businesses around
those insights.
For those who think that he is into full fledged pensioner’s life now, he heads Sir
Dorabji Trust and the Sir Ratan Tata Trust, which control nearly 60% of
the group company. Its very logical that he is in no mood to rest on
his laurels.
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