Ratan Tata, the man who shaped the Tata group’s global legacy

Ratan Tata, the man who shaped the Tata group’s global legacy

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It was the troubled period of the early ‘90s, India’s economy was floundering; the Gulf War was messing up the world and there was political turmoil in India. That’s about the same time that the legendary JRD Tata decided that it was time to pass on the baton. And his chosen man was his nephew Ratan Naval Tata.

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Ratan Tata was already heading Tata Industries, a group company, and the two met every Monday at JRD’s office. As the story goes, on one such meeting on March 23, 1991, the great man asked Ratan Tata as he walked into his room: “Well, what’s new?”. “Nothing Jeh, we only met on Friday. There’s nothing new since then,” replied Ratan Tata. Jeh is supposed to have smiled and said “I have something new, I’ve decided to retire as chairman and to appoint you in my place as Tata Sons’ chairman.”

Era that changed the group’s fortunes

This famous anecdote, recounted by Ratan Tata himself, set off a remarkable era for the Tata group, one that changed its fortunes forever, and launched the career of one of India’s most celebrated industrialists in the post-Independence era. Tata inherited a set of companies that were disparate and united only in name. The companies were run by satraps such as Russi Mody, Darbari Seth, Ajit Kerkar and Nani Palkhivala, who treated them as their personal fiefdoms. And the challenge began there.

  • Also read: India and India Inc have lost a true visionary: Birla on Ratan Tata’s death

Today, as we take stock of Tata’s legacy and career, there are three things that stand out. First, he knit the Tata group into a cohesive whole, stringing the splintered entities together and giving them a sense of belonging to the Tata group. Second, he boldly restructured the group, exiting businesses where the group was not counted amongst the top three and entering sunrise businesses. Finally, he dared to take the group global, acquiring such well-known brands as Tetley, Corus and Jaguar Land Rover, to name just three. True, not all of these turned out to be successful but what’s important is that he imbued in the group entities the realisation that in a globalised world, they had to strike out abroad.

The way he crushed the revolt by the group satraps in his early days and gained control of their empires is now the stuff of legend. It must not have been an easy thing to do for the gentle, mild-mannered person that he was but it was crucial for the survival of the group. That the entire episode left a deep sense of hurt in him is evident from what he himself wrote in 2003: “If I reflect on what these ten years have been for me personally — they have been a mixed bag. There is some satisfaction…. there is also a sense of frustration at the resistance to change from many of my colleagues that I have seen through this period of time. Some resistance is open, which I can deal with, but some resistance in the form of undercurrents, has been very destructive.”

  • Also read: Ratan Tata death: Maharashtra announces one-day state mourning; TCS calls off press conference for Q2 results
Journey from trucks to cars

Tata’s intervention in the then Tata Engineering and Locomotive Company or Telco (now Tata Motors) changed its fortunes turning it from a stodgy manfacturer of low-tech trucks and buses to a producer of glitzy passenger cars. Crucial to this move was the acquisition of Jaguar Land Rover which not only rubbed off on the brand but also helped Tata Motors design and produce better cars in India. Of course, the direction was set when Tata embarked on the Indica project in 1998.

If Indica changed Tata Motors’ profile, the Nano, which was supposed to make it a mass manufacturer of affordable cars failed to take off for various reasons. The most important of these was the delay in launching the car due to the opposition by Mamata Banerjee, then Opposition leader in West Bengal. She was bitterly opposed to the company’s plant in Singur and Tata was forced to relocate it to Gujarat. The time lost in the process proved crucial.

The soft-spoken, gentle exterior of the man covered a steely resolve of someone who would not run away from a fight. His famous quip at the peak of the controversy at a press conference in Kolkata is now the stuff of yore. “If you put a gun to my head, you either pull the trigger or take it away. I will not move my head,” made headlines the next day.

Corus: winner’s curse

The Corus acquisition again brought out the fighter in Tata. The seven-and-a-half hour bidding battle for Corus between Tata Seel and Brazil’s CSN was fought to the finish with just 5 pence separating the two bidders. In retrospect, it may have been better if Tata Steel had lost! The ill-effects of the acquisition continue to dog the company till date.

The Mistry coup

Tata’s legacy was marred in no small measure by the boardroom coup that he staged in October 2016 to ease out his own hand-picked successor, Cyrus Mistry. The real story of the fallout between Mistry and Tata is not known and will never be known now but Mistry’s ouster could’ve been handled more elegantly. The episode somehow did not fit the profile of Tata as a principled, ethical and gentlemanly person. The first feeling was one of disbelief when the news broke. “No, it can’t be Tata,” was the first thought that crossed one’s mind. The subsequent court battles and the group’s moves such as taking Tata Sons private to checkmate any possibility of the Mistrys selling their 18 per cent stake in the holding company reeked of corporate intrigue and took some sheen off both the group and Ratan Tata.

Yet, the man’s accomplishments and contribution to Indian industry and its economy are so big that they eclipse the Mistry episode. If the group is now striking forward with massive investments in sunrise sectors such as semiconductors, defence and renewables, and in aviation it is in no small measure due to the vision of Ratan Tata and the direction that he set.

Here’s an anecdote that sums up the man’s vision for the group very early in his life. The year was 1978 and Tata, all of 40 years of age then, dared to send a “Tata Plan” to JRD, who had already been at the helm for 40 years. The plan laid out an elaborate restructuring of the group with the philosophy that it should exit any business where it was not amongst the top three. This was exactly the template that Tata followed when he became Chairman.

Tata’s legacy and achievements are unquestionable but he leaves behind a huge vacuum having not nominated his successor. N. Chandrasekaran has lead the group creditably since 2017 but it remains to be seen what happens at the Tata Trusts, which wield considerable influence over the holding company with their 52 per cent shareholding. The post-Tata era will bear close watching of the group.

  • Also read: India mourns the passing of Ratan Tata

Lou Gerstner, who turned around IBM in the nineties, when Tata was doing the same with his group, wrote a famous book in 2004 looking back at IBM’s turnaround. The book was titled “Who says elephants can’t dance?” To borrow and turn that title a bit, Tata proved that elephants can dance.



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