At the time when he first took charge as the managing director and chairman of Tata Steel Ltd in 1993; Russi Mody who was seen as the strongest successors to the throne likened Ratan Tata to a circus performer. Reacting to Tata’s statement that Tisco would not be affected by the exit of Russi Mody, had replied: “Ratan is quite right. No one is indispensable. My disappearance from Jamshedpur may not be felt, but the arrival of Ratan Tata and (JJ) Irani will certainly make a difference. It’s all like a circus — the serious acts of entertainment are always shown first. Then come the clowns and the animal trainers. That may well be the case with Tisco.”
Harsh words to say the least; although Russi wasn’t the only one; the coronation of Ratan Tata as the head honcho of the Tata Group in 1993 recieved alot of wrath and flak from its detractors, trade pundits had written off this young lad. Many felt Ratan Tata was considered to have gained his position purely on the strength of his surname; he was incompetent, raged opponents both within and outside Bombay House, and he didn’t possess an iota of the charisma of his uncle and predecessor, JRD Tata
Nearly 22 years later, Ratan Tata has achieved almost everything on his 1991 agenda. The combined market captalisation of all the 32 listed Tata companies was $89.88 billion as of March 2012. Tata Group revenue is 40 times the 1991 level, while net profit has gone up four times.
Some of the notable achievements Tata Group has achieved under the leadership of Ratan Tata clarifies his accomplishments further; it is the largest Indian multinational conglomerate; more than 65% of the group’s income comes from overseas and it has 100 operating companies (32 listed) spread across 56 countries in six continents.
In the past decade — the decade that marked the glorious years of Ratan Tata — nearly $18 billion was shelled out to acquire 22 companies worldwide, including Tetley Tea and Corus Steel in the UK, New York’s Pierre Hotel and Jaguar Land Rover.
The Tata Group includes India’s largest private steel company, the biggest auto manufacturer and the largest IT outsourcing firm.
In the last two decades; Ratan Tata has not only achieved more than JRD Tata but has managed to carve out a new identity as the leader of the Tata Group. Majorly known as the Steel giant and largest producer of heavy end vehicles in the country; Ratan promoted seven hi-tech businesses under Tata Industries in the eighties: Tata Telecom, Tata Finance, Tata Keltron, Hitech Drilling Services, Tata Honeywell, Tata Elxsi and Plantek.
Ratan Tata’s success story stems from the fact that today once his fierce detractors sing praises for him. Russi Mody in an recent interview admitted that the Tata Group chairman is a class act. Known as the ‘Jewel’(Ratan) of the Tata Group; Ratan Tata had to come out of retirement three times in the last decade; showing his indispensable authority in the company and the unanimous support from his shareholders.
However this hasn’t been a smooth ride; Nothing in Tata’s early life presaged this. An indirect descendant of the great Jamshedji, Ratan Tata had a tough childhood, his parents divorcing when he was only seven.
After attending Mumbai’s Campion School, he went to Cornell in the US, where he earned a degree in architecture and structural engineering, hardly qualifications for building great companies.
When he returned to India after turning down a job with IBM on the advice of JRD, he was sent to Jamshedpur to work the floor at Tata Steel with other blue-collar employees, shovelling limestone and handling the blast furnace. The trial by fire at the bottom of the pecking order would stand him in good stead.
His managerial career did not start auspiciously. Given charge of Nelco and Telco during the license-permit raj, he struggled to put them on the rails and might well have thought he was running Hell-co. Tata satraps breathed down his neck; critics said he looked out of depth.
JRD’s decision to pass the baton on to him in 1991 coincided with the start of India’s economic reforms. After a period of consolidation, Ratan Tata came into his own.
The astonishing $435 million deal for Tetley, the most English of teas and companies, in what was then the biggest acquisition in Indian history. It was a forerunner to a wave of international expansion by Indian businesses in IT and pharma business. The west began to take notice.
But even that was a tip of the ice berg of what was soon to follow. Over the next five years, Ratan Tata led an acquisition spree that has expanded the group to a nearly 100-company behemoth that makes everything from salt to software, to shortly, “swish” cars. Few events shook the corporate world more than Tatas’ $21-billion acquisition of Anglo-Dutch steelmaker Corus, an event that would have filled his great forbear Jamshedji with pride.
It’s no secret that the genesis of the Tata Group’s blockbuster moves can be traced to him. Tata’s first global venture — the February 2000 purchase of Tetley — had begun five years earlier when Ratan Tata made a $318 million bid for the tea company.
That didn’t work out, but Ratan didn’t lose heart and kept an eye on the company’s activities. The deal was finally clinched at $430 million. Sheer perseverance may have made that deal come true
The Indian markets have usually considered Tata to be out of his depth, questioning — and dismissing — his big, bold moves as ‘Ratan’s follies’. However the <i>Philanthropist has proved each of his detractors wrong . It is this quality of taking bold decisions and dreaming Big and small that makes him such a Big Success Story- whether it is the Land Rover Deal or </i>undertaking a huge gamble with India’s first indigenously manufactured ‘people’s car’, appropriately termed Indica. Ratan Tata has always tried to create Tata as the brand of the future.
He has not shy’d away from dreaming Big for the small people whether it is the promise he made to create a Rs 1 lakh (Rs 100,000) car or for that matter, making water filters that don’t need electricity (for rural areas). Tata’s big deals are balanced by projects focusing on the lowest common denominator.
Several years ago, when he dreamt of producing the World’s cheapest car worth 1 lakh; people laughed on his thinking. In 2008, when Ratan Tata launched his pet project –Nano, he did the unthinkable.
Several years ago, in an interview, Tata dismissed the notion that he was a risk-taker. “There have been certain occasions when I have been a risk taker. Perhaps more so than some, and less so than certain others. It is a question of where you view that from. I have never been speculative. I have never been a real gambler in the sense that some very successful businessmen have been,” he said.
Going by that logic, Ratan’s ‘follies’ were decisions guided by prescience and not instinct and gut feel.
The Success Story of Ratan Tata has had its shares of controversies; Ratan Tata’s pet Nano project was mired in controversy about land acquisition for the factory. After farmers in Singur, West Bengal, protested about forcible evictions and inadequate compensation, and Mamata Banerjee leapt into the fray, the Tatas pulled out of the state.
The company shifted the factory to Sanand, Gujarat, but Ratan Tata’s subsequent praise for controversial Gujarat Chief Minister Narendra Modi also drew criticism.
He stepped down as the chairman on 28 December 2012 and now holds the position of Chairman Emeritus of the group which is an honorary and advisory position.
Perhaps the secret of Ratan Tata’s success lies in his ability to foresee the direction the economy — and policy — was taking, consolidate the business accordingly, and embrace change to leap ahead. When Tata Sierra and Tata Safari failed in the Indian Markets, he didn’t bog down with the failure and criticism but leaped foward with Indica which is still one of the biggest success story of the company having sold over a million cars so far.
The quiet understated powerhouse now includes the world’s second largest tea business (Tata Tea); Asia’s largest software firm (Tata Consultancy Services); the world’s fifth largest steel giant (Tata Steel); a plush worldwide hotel chain (Indian Hotels); the world’s fifth largest truck maker (Tata Motors) and an automobile manufacturing spectrum that spans everything from a bicycle factory in Zambia, a $2,500 cheap car, South Korea’s Daewoo commercial vehicle and $50,000 luxury Jaguar models.
Ratan Tata has done it without experimenting with his hairstyle, riding fancy motorbikes or dating Bollywood heroines (he remains single.) In a recent interview, he confessed he “never had the desire to own a yacht”.
Tata’s job is the most difficult one in the country today. Whoever runs the Tata Group has to provide strategic leadership, direction and inputs on multiple businesses, which is hugely challenging. After the Super Success Story the Tata Group has seen in the past two decades in the form of Ratan Tata; the new heir to the throne Cyrus Mistry has some big shoes to fill.
Without any doubt, Sir Ratan Tata; an reciepent of the Padma Bhushan in 2000 , Padma Vibhushan in 2008 and Lifetime Achievement Award winner by Rockfeller Foundation in 2012 is the Biggest Icon of the Post Liberalisation Era of India.
By Ish Chandok
Image Source:By U.S. Embassy New Delhi [Public domain], via Wikimedia Commons