Ratan Tata: Titan of industry, icon of modern India
Ratan Tata, a titan of Indian business, passed away at 87, remembered for his leadership, vision, philanthropy, and grace in transforming the Tata group.
“Goodnight, sweet prince, and flights of angels sing thee to thy rest.”
from Shakespeare’s Hamlet
Ratan Naval Tata (RNT) is no more. He would have been 87 this December. For most of us though, he was the prince charming of Indian business to which he brought a rare combination of beauty and brains. A man of refined tastes and self-effacing to a fault, he built India’s finest industrial conglomerate. Alongside, he loved dogs, flew planes well into his 70s and mesmerized millions with his luminous personality, his chivalry and his simplicity.
Nor was he an effete poet. As he showed in his bruising early career battles with the powerful Tata group satraps, beneath the soft exterior lay a tough hard-nosed, even ruthless empire builder.
A degree in architecture from Cornell University in US where he went after his schooling in Mumbai, provided Tata with the intellectual bulwark to manage the complex task of dragging a legacy business group into the modern era. However, it didn’t teach him the smarts needed to manage the internal dynamics of a loosely-held conglomerate that was more a union of companies than a tightly federated entity. The learnings for that came from within.
After early and barely noticeable stints with fringe Tata group companies such as Nelco, he was thrust into greatness in March 1991 when the then chairman JRD Tata chose him as his successor. In a group which had been headed by the likes of Jamshedji Tata and JRD Tata, he had to prove himself worthy of the appointment in a gladiatorial contest, the likes of which has rarely been seen by Indian business.
What followed was an early prequel to the game of thrones. Though he had the retiring chairman’s tacit blessings, he was largely an unproven and unknown figure. The more flamboyant satraps of the group like Russi Mody who led Tata Steel (then still Tisco), Ajit Kerkar at Indian Hotels and Darbari Seth, who headed Tata Chemicals, refused to take him seriously. Most in fact thought he would be a pushover, a softie, who had been handed over the top job because of his name. One among them, did more than just ignore him. Russi Mody, the uncrowned king of Jamshedpur, whose business instincts had been forged in the fiery furnaces of the steel city, fought the new boss tooth and nail.
In a fierce boardroom battle, RNT ousted the older man and took charge of Tata Steel. It wasn’t just corporate ego or a battle of wills. He had rightly assessed that for all his charisma, Tata Steel under Mody was ill equipped to handle the radically altered business environment in the wake of the reforms of 1991. The company would go through several rounds of painful restructuring before it became a modern steel company but there was no questioning RNT’s authority or his ability to envision the future after that.
Indeed, through his 22 years at the helm of the Tata group, RNT had his eye firmly on the future. The empire he inherited was unwieldy though vast. Its topline was impressive but not so its bottom line with most businesses in the group offering poor returns on investment. Under JRD’s benign oversight, each company had been free to chart its own course, even if it was to nowhere. The ruling family too had been guilty of benign neglect. Early in RNT’s tenure, with the promoter stake in Tata Steel a lowly 5 percent, the new chairman learnt that the steel company faced the threat of a hostile takeover. He proceeded to nullify the attack while shoring up the promoter stake in all the other group companies as a moat against future overtures. Today Tata Sons’ stake in Tata Steel is 34 percent, in Tata Motors, 36 percent and in TCS, 72 percent.
Once these defensive maneuvers had been accomplished, RNT turned to what he did best, dreaming big. There was something of that in the audacious acquisition of the Anglo-Dutch steel company Corus in 2006 for $12 billion -- still the largest single cross-border acquisition out of India. In quick succession followed another audacious purchase, that of Jaguar Land Rover in 2008, significantly from the humbled American giant Ford Motors that had once spurned his advances.
Similar derring-do was evident in building that car, the Nano. Sure, there was always room for another affordable car in India besides what Maruti was making. But putting the price tag before the first blueprint had been generated isn’t how cars are made. And doing that just because you wanted to give a middle class family of four the joy of migrating from a scooter to a four wheeler was crazy. But then as Oscar Wilde wrote, “A dreamer is one who can only find his way by moonlight, and his punishment is that he sees the dawn before the rest of the world.”
That both ventures, Nano and the Corus acquisition, ultimately came to naught proves the fallibility of RNT’s decision making. As did the unsavory episode of the late Cyrus Mistry’s ascension to the top job and his subsequent exit, engineered by the very man who had brought him in. Neither of the two events brought any credit to RNT and somewhat sullied his reputation for professionalism.
But then Tata Motors is today the domestic market leader in electric vehicles and Tata Steel is valued at $11.5 billion. What’s more, Mistry was replaced by N. Chandrasekaran, the first ever chairman of the group who was neither from the larger Tata family, nor a Parsi and not even a shareholder. Just goes to show that while Tata might have made errors of timing or judgment, his intent was always kosher.
Among the pantheon of contemporary Indian business leaders RNT stands tall. He earned billions for his companies and spent barely millions. That his personal net worth added up to less than half a billion dollars is testimony to his philanthropic ethos, a vital part of his inheritance. He will be remembered not just for his many business successes but as much for the grace and decency with which he achieved them. The man who would hold open the elevator door if he saw an employee rushing to take it, was the perfect role model for business leaders. It is India’s loss that few of those around him have taken the cue.