Ratan Tata Part 3 – the Visionary: a Legacy of Sustained Growth

This is the third and final part of a three-part series on Ratan Tata. This part focuses on the dynamism, the independence and the integrity of the man who raised the Tata group to a position of international prominence.

Based on an article by Girish Kuber in the Sunday edition of Loksatta dated 23 Dec 2012

Translated by Runa Mookerjee

Series Editor DOAonline

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Ratan Tata was a mold breaker and a trend setter. An architect and structural engineer by training (he holds a B.S. in architecture and a Master’s in structural engineering, both from Cornell) Ratan Tata’s inclination for path-breaking thinking was evident even in his automotive ventures – the Tata Indica and the Nano. As an architecture student, Ratan Tata’s favorite subject was ‘Design;’ it was one that remained close to his heart throughout his career. Doodling new designs was a favorite pastime of his, and both the Indica and Nano were born out of his sketches. But this is just one small part of the story.

Following the liberalization of its economy in 1991, India threw open its doors to trade and foreign investment. Foreign MNC’s began to enter the Indian marketplace. At the same time, it became opportune for Indian companies to enter global markets. Ratan Tata was one of the first to capitalize on the opportunity. At a time when most of the Indian industrial sector was inflexibly inward-looking, Ratan Tata steamrolled into the global marketplace. He built alliances with – and later took over – several international companies including European steelmaker Corus, the luxury automaker Jaguar Land Rover, and Tetley, the tea giant. Till then, ‘TATA’ had merely been a well-established Indian brand. Acquiring an international portfolio brought it global recognition.

There was a time when Indian companies were seen as an easy target for global acquisitions – Swaraj Paul’s attempted hostile takeovers of DCM and Escorts were a result of that perception. Ratan Tata sent out the message that the tide had turned. Today, over half of the over US $100 billion revenue of the Tata Group comes from companies situated outside India. That’s an interesting statistic for a typically ‘Indian’ brand.

Ratan Tata’s bold moves broke the barriers of traditional ‘Indianisims’, bringing in a new respect for Indian companies in general and the Tata brand in particular. In fact, such was the uptick in the confidence in the group that local companies in Britain looked towards Tata as a partner of choice. So much so, that some employee unions welcomed Tata as a ‘the best option’ in the event of a takeover. The path that Ratan carved out set a new trend.

Naturally, not all of Ratan Tata’s decisions during his tenure as CMD of the Tata Group were stellar successes. In retrospect, it is evident that Corus was a loss-making deal; the Jaguar Land Rover deal became profitable only later on. However, as JRD believed, to achieve success, you have to be ready to take risks – and that’s what Ratan Tata did. But he did so, without breaking the rules. His integrity has protected him from any hint of the scandal that often surrounds industrial tycoons. Barring the Nira Radia tapes, corruption-related controversy never touched Tata. However, the tapes did bring to light the deeply tainted business environment of the telecom sector, one that can actually suffocate a ‘clean’ operator.

The Tatas also distinguished themselves from other businesses by focusing on strategies self-sustained growth, rather than following the government subsidiary-benefits model embraced by many other companies. Government subsidy can be a profitable wave to ride. But as the Tatas realized, it is also one that can suddenly collapse, leaving the companies that depended on it completely stranded. Thus, unlike other companies, they never sought to make quick profits by exploiting government subsidies. The Tata group’s growth story is entirely their own, a fact often overlooked by those who think solely in terms of company size or profitability.

The Tata’s course of action has had its difficulties. In the game of profit and loss, at certain points you may incur more losses than gains, and when others rush ahead, you may begin to worry if you have missed the boat. What JRD would do at such times, was to step back and evaluate his strategy. But he never lost confidence. So once, when asked if he felt that he was falling behind his faster-growing competitors, he replied, “Form is temporary, class is permanent.” That is precisely what Ratan Tata proved. Critics generally wait for business icons to fall. But that is a fate that Ratan Tata skilfully avoided. He retired on his own terms, content.

Renowned Maharastrian saint and poet Samarth Ramdas said that an ideal king is an ‘Upbhogshunya Swami:’ someone who does his job, expects no personal profits from the position, gives it up as if it was ‘shunya’ (nothing) and then moves on to a higher plane. Ratan Naval Tata fits the description perfectly. He often expressed the desire to retire, but had to postpone his scheduled retirement three times. Finally, at the accomplished age of 75, he was able to step down.

After much headhunting, he zeroed in on Cyrus Mistry, who at a few years shy of ‘50’ is the ‘young scion’ who has ascended to leadership of the Tata Group. Now “apro” Cyrus will deal with pressing questions such as what to do with the sprawling TCS and Tata Indicom businesses. Ratan Tata completed JRD’s unfinished projects and dreams. Now, it is up to Mistry to carry the legacy on. Should he succeed in carrying forward the unique Tata mix of integrity and dynamism, he will have forged another link in the chain of Tata leaders who transmit their values and success across the generations – a continuity that is another quintessential Tata trait!

 

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