It's ta-ta to Ratan Tata, the tycoon who built a £42bn empire

The poster boy of Indian business is retiring – but who will replace him?

Mumbai

On the Colaba seafront at the tip of Mumbai, workers are putting what appear to be the finishing touches to an elegant retirement home for India’s most celebrated business tycoon.

When Ratan Tata finally steps down at the end of next year from the helm of what he has turned into a global corporate empire worth £42bn, it will be into this three-storey, white-painted home, with an infinity pool and large windows giving an unobstructed view of the ocean, that he will move.

But if there is a calm efficiency about the site of Mr Tata’s six-bedroomed retirement property, it is in marked contrast to the anxiety that seeps from the boardroom on the fourth-floor of Bombay House, the solidly-built, Raj-era headquarters of Tata Group, in the heart of the city. It from there that officials are overseeing a corporate headhunt for a replacement for the post that represents both the biggest job in Indian business and the largest manufacturing employer in the UK.

The secret process, being conducted by five senior figures who each have a long association with the Tata Group, was due to have been completed by March. But, in a state of affairs that reflects the scale of the challenge, no announcement has yet been made. The search for a successor to the man who became the poster child of India Inc continues.

The list of potential figures speculated about by India’s business publications – PepsiCo chief executive Indra Nooyi, Arun Sarin, the former CEO of Vodaphone and Carlos Gohsn of Nissan have all been mentioned - is one that changes from month to month. But one name has remained constant, that of Noel Tata, the chairman’s half-brother and similarly a member of Mumbai’s Parsi community. Last year, Noel Tata, who is also the son-in-law of the single largest shareholder in the group’s holding company, was made the head of Tata International, an engineering subsidiary, in a move many saw as a final grooming for the top job.

Observers say the panel members carrying out the executive search are confronted with an almost existential decision as they come to choose a successor; do they continue a 100-year-plus tradition and appoint a member of the Tata family, or else take a genuinely radical step and go outside? “It’s an extremely difficult situation. The company bears the name of its founder,” said one business insider, who has known the Tata family for many years and who asked not to be identified. “It’s a seminal moment for the group.”

The selection panel is sworn to secrecy about the details of its task, but one of the members, Lord Bhattacharya, a British engineer, hinted at the nature of its challenge. “He has enormous shoes to fill. You have to say they are not easy shoes to fill,” said the peer, the director and founder of Warwick Manufacturing Group and a close friend of the tycoon. “Since he took over in the early 1990s, he has transformed Tata into what it is today. He is a brilliant entrepreneur.” He added: “In regard to [the British acquisitions] Jaguar and Corus, he has saved them for the country. He has turned these companies around and in Britain today he is the most successful industrialist.”

The business empire of almost 100 companies with 395,000 employees soon to be vacated by Mr Tata, was started as a textile business by his great-grandfather, Jamsetji Tata, in 1868. Mr Tata took the helm in 1991. In that time he has overseen a reported ten-fold growth and made a number of major acquisitions, including that of Tetley tea.

Amid the colourful, noisy world of Indian tycoons, Mr Tata is known as a quiet, reclusive figure who spurns the ostentation of some of his counterparts. Asked earlier this year by an interviewer about the £630m, 27-storey property built in Mumbai by Mukesh Ambani, head of Reliance Industries, he replied: “It makes me wonder why someone would do that. That’s what revolutions are made of.”

Mr Tata, who studied architecture at Cornell University, never married and his private life has always remained out of the public realm. However earlier this year, in an interview with CNN, he made some rare revelations, suggesting he had come close to marriage several times. “I came seriously close to getting married four times and each time it got close to there and I guess I backed off in fear or for one reason or another,” he said. “Each of the occasions was different, but in hindsight when I look at the people involved; it wasn’t a bad thing what I did. I think it may have been more complex had the marriage taken place.”

Mr Tata, who underpinned Tata’s global reputation with the £6.2bn purchase of Corus in 2007 and Jaguar and Land Rover in 2008, has always been projected as an ethical ambassador for Indian business and a man driven by the desire to help his country. When, in 2008 he announced plans to develop the 100,000 rupee Nano as a “people’s car”, he claimed his inspiration had been what he saw every day on India’s roads. “There was the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby,” he said at the launch. “It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family.”

But Mr Tata, who refused repeated requests for an interview, has been unable to entirely avoid some of the controversies that have dogged other Indian business leaders. Earlier this year he gave evidence to a parliamentary committee investigating a telecoms scandal worth billions of pounds. The tycoon was completely cleared by federal investigators. Nira Radia, a lobbyist and public relations manager who represented a political party implicated in the corruption case and who also represents Mr Tata, was also asked to give evidence.

A senior Tata executive stressed the finding by the Central Bureau of Investigation that Mr Tata was not involved in the scandal. He also said a survey carried out for internal purposes in January had not seen any significant change to the brand’s image.

There have been other controversies. On several occasions Mr Tata has drawn ire for praising Narendra Modi, the chief minister of Gujarat who has been accused over his alleged role in the 2002 killing of hundreds of Muslims. Earlier this year, in an interview with The Times, Mr Tata suggested that when he took over at Corus and Jaguar Land Rover, he had not found an enthusiastic work culture amid some of the managers. “In my experience, no one is prepared to go the extra mile, nobody,” he said.

On the business side, meanwhile, Mr Tata’s pet project the Nano, has yet to achieve the success he had hoped for. While the company had projected sales of 1m a year, a report at the end of May suggested only 110,000 of the vehicles had been sold since April 2009. Other reports suggest that the sales curve is on the up, partly as a result of a changed marketing strategy that has seen a Nano placed in the premises of every Big Bazaar supermarket.

Analysts believe who ever is appointed to succeed will face several challenges, including the sheer size of the Tata Group’s conglomerate, which means it faces challengers on many fronts. The appointment must also be able to lead in a global market. “I think the bets are that it will be Noel,” said Sourav Majumdar, a former journalist based in Mumbai who now works in communications. “It will have to be someone of a stature that is international. The selection panel knows if they don’t have someone of a global stature they will not be able to take the group forward.”

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