Ratan Tata’s retirement yesterday, on his 75th birthday, from the chairmanship of Tata Sons, India’s biggest conglomerate, marks the end of an era for Indian business as well as the group. No-one has bestraddled Indian business in the way that he has done, presiding over Tata’s $100bn-plus revenues, more than half from 80 countries overseas, with over 450,000 employees in 100 operating companies and interests ranging from tea to telecoms, software to hotels, wrist watches to defence rockets, and coffee (Starbucks) to power and steel.
There is no other Indian business figure of similar stature, and no one near to being able to take his place as a symbol of managerial ethics and success. He took over in 1991, the year of India’s economic reforms, first uniting the loosely run group under the Tata banner, ousting elderly satraps, and then using opportunities unleashed by the reforms to spend $20bn on foreign take-overs and become India’s first group with $100bn revenues (2011-12). His dream for 2020-21 is $500bn.
He strove for a corruption-free group, and lost influence in Delhi and elsewhere as a result – he has always seemed uncomfortable with the complexities of political and corporate corruption that has grown enormously in India during the past 20 years. “I can say, with my hand to my heart, that we have not in fact partaken in any clandestine activity,” Mr Tata said last year when being questioned about his group’s involvement in a far-reaching telecoms scandal. “I think there are many honest businessmen. There are many that bend. I am happy that I have not bent”.
But such a massive array of businesses could never fully match the “exemplary” ethics and values that he has said he would like to be his legacy, and he unwisely hired Nira Radia, an influence peddler at the centre of a telecoms-linked political crisis in 2010, as his trusted public and government relations adviser. His companies’ environmental record has also not always been as good as he would like it to appear, especially in the extractive industries, and his lack of concern was demonstrated by the construction of the Dhamra Port in Orissa in 2008.
His biggest contribution has been to spearhead Indian companies’ foreign investments abroad, starting rather unexcitingly with the purchase of Tetley Tea in the UK in 2000. Much more significant was a take-over of South Korea’s Daewoo truck manufacturer in 2004. This was a trailblazer because it showed that someone in India’s largely unimpressive and uncompetitive manufacturing industry had the ability and nerve to venture abroad. I have always thought that this deal was a turning point in Indian industry’s self-confidence, which then grew rapidly in the mid-late 2000s.
It led on in 2007 to Tata Motors’ $2.3bn purchase from Ford Motor of the Jaguar Land Rover business, which has been a huge success. Sceptics criticised the deal because they had not foreseen that, by capitalising on design work started but not carried through by Ford, Tata had the energy, finance and managerial strength to produce impressive new models and expand sales internationally, especially in China. This demonstrated Mr Tata's capacity to drive through his decisions, as he also did, against advice from senior colleagues, on his far less successful $11bn take-over in 2007 of Europe’s Corus steel business that has left Tata Steel heavily indebted.
He then spearheaded the misguided concept and launch in 2009 of the Nano, the world’s cheapest car, which failed to take off. Aspirational Indian families, who Mr Tata dreamed of upgrading from unsafe over-loaded scooters, did not want to own the world’s cheapest product – it has now been re-launched slightly upmarket and is doing better.
Tata Motors was the company where Mr Tata had most direct influence and significantly, he spent yesterday, his last day at work, at its Pune factory. But the company’s India operations need an overhaul now that it is no longer controlled by the patriarch, as do the steel and telecommunications businesses plus, according to some reports (left), the Taj hotels. The company that needs least attention is TCS, the information technology cash cow.
Over the last two decades, Mr Tata has changed many parts of the group and has led it abroad to many countries including the UK where it is the largest private sector employer. He has did that at a time when other big Indian companies, which thrive by bribing the Delhi and state governments, were shy of venturing into unknown territories.
He now retires to be chairman of the Tata’s charitable trusts that own 66% of the group, having handed over as chairman of Tata Sons, the main holding company, to Cyrus Mistry, a 44-year old businessman linked to the Tata family by marriage and the Parsi religion, and to the group by an 18% equity stake.
Mr Tata’s leadership has symbolised ethics and vision, despite a few bumps, and the gap left by his retirement is the absence of an Indian businessman with a similar renowned image in India and abroad.
For a longer version of this article go to John Elliott’s Riding the Elephant blog at http://wp.me/pieST-1Sa