|
Ryan Martis
|
 |
« Reply #6 on: December 07, 2010, 12:23:45 AM » |
|
 And Ratan was choosy about its use (stepmother Simone's cosmetics business, Lakme, which was later sold, and half-brother Noel's retail business didn't make the cut).
Zia Mody, managing partner at law firm AZB & Partners, which has advised the Tatas on acquisitions like Corus and Jaguar Land Rover, believes the group-culture Ratan Tata has created will stay on as his legacy.
"He has institutionalised processes. The reputation of the group and its guiding principles are uppermost in his mind while taking decisions," she points out.
Business historian and writer Gita Piramal has a different take on Ratan Tata's legacy. "Tata put 'design' into the group -- in mergers and acquisitions, engineering or cars or anything else. It is a very forward-looking strategy, putting new competency in very old companies," she says.
Ratan the manager
Perhaps the secret of Ratan Tata's success lies in his ability to think big -- and small. While he guides the Tata Group to pick up the luxurious Pierre Hotel in New York, he's also driving the launch of the budget Ginger hotels in India.
He has the ability to envisage an automotive business that encompasses diverse businesses such as the iconic Jaguar and Land Rover marques on the one hand, the world's cheapest car the Nano, on the other, and hardy, rough-road trucks sandwiched in between.
JRD is admired for creating world-class companies that could be globally competitive at a time when India was still not thinking scale and was instead leaning towards a socialist set up.
In contrast, Ratan had the vision to foresee the direction the economy -- and policy -- was taking, consolidate the business accordingly, and embrace change to leap ahead.
|
|
|
|
|
|
Ryan Martis
|
|
« Reply #7 on: December 07, 2010, 12:23:56 AM » |
|
 The group was totally unprepared for liberalisation, which was knocking on the door when he took over. Ratan knew the Tatas required a radical change in mindset and he set out to work in that direction.
He streamlined the organisation by selling some businesses and rationalised the processes and functioning of the Tata Group.
That explains why it still remains among the top three business groups in the country while many have fallen by the wayside -- or dropped in the rankings -- in the post-liberalisation era.
Yet almost none of this change came at the cost of people or employee morale. Be it the fixing of a retirement age for various employees or the creation of a close-knit group that could meet the group's ambitions, Ratan created a nimble-footed organisation.
Insiders say that those who were asked to leave were given full salary till the age of 60.
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 Corus deal is also a telling example. A close associate recalls Ratan calling Tata Steel MD B Muthuraman, who was on a trip to Hong Kong. "I've learnt that Corus is up for sale. Do you think we can look at it?" he asked. After some thought, Muthuraman replied that they could perhaps pick up a strategic stake. |
|
|
|
|
|
Ryan Martis
|
|
« Reply #8 on: December 07, 2010, 12:24:06 AM » |
|
 Ratan had different plans. "We must buy that company. Think it over," he advised. The next morning, Muthuraman called Tata to say he was game. With no disrespect to Muthuraman and other leaders who have spearheaded the various companies in the group, it must be said that such gutsy deals can't be done without a strong group backing or reputation.
The Corus deal is proof of the kind of goodwill the Tata Group has created for itself across the world, not just within the country. Unlike the Mittal Steel bid for Arcelor, which created a huge furore, the Tata bid faced little opposition.
Although the Anglo-Dutch company had several plants in the United Kingdom, there was little attempt to stop the deal by either political parties or trade unions. The Corus management was happy to support the deal, placing its faith in the group's reassurance that there would be no layoffs and that pension shortfalls would be taken care off.
Not just that. Given that Tata Steel was bidding for a company four times its size, it could not have funded the entire deal. In fact, the company put up just 25% of the equity; the rest was funded through foreign debt.
And even that was to be funded only through cash flows from Corus, with no recourse to Tata Steel -- a reflection of the credibility the group enjoyed in global financial markets.
Tata's big deals are balanced by projects focusing on the lowest common denominator. In fact, Tata has been among the very few to perfectly understand the pysche and the needs of the Indian consumer -- and build successful businesses around those insights.
That is, by recognising that the big market opportunity lies in making desirable products affordable for a larger audience and creating successful products to cater to a market need -- be it the passenger-car foray with the Indica in the early 1990s, the promise 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).
Hemendra Kothari, the doyen of investment banking in India who has worked on most Tata Group deals, has watched Tata's working style closely. "He is a very discerning person when it comes to decision-making. And once he has made up his mind, he is prepared to go all out to achieve his objective, be it Corus or Nano," he says. |
|
|
|
|
|
Ryan Martis
|
|
« Reply #9 on: December 07, 2010, 12:24:14 AM » |
|
 Ratan's folly
Still, the markets have usually considered Tata to be out of his depth, questioning -- and dismissing -- his big, bold moves as 'Ratan's follies'.
The Indica was the first. People scoffed openly, when, in 1995, Tata spoke of building a passenger car with "the Zen's size, the Ambassador's internal dimensions and the price of a Maruti 800".
The scepticism seemed justified as project costs escalated to Rs 1,700 crore (Rs 17 billion) and Tata Motors posted Rs 500 crore (Rs 5 billion) in losses -- the biggest splash of red in Indian balance-sheet history.
"Even within Tatas, people kept asking me to distance myself from the project so that when it failed I wouldn't be stuck with the blame. And when I refused to do that, they distanced themselves from me," Tata said in an interview a few years ago.
Ratan proved his detractors wrong, and how. Indica went on to become Tata Motors' great success story -- about a million units have been sold since its 1998 launch.
The group's global ambitions were greeted with similar scepticism. The Corus deal would lead the group to bankruptcy, critics declared: investors dumped Tata Steel shares after the announcement, and the share price plunged 11%.
And Tata was driving straight to disaster with the Jaguar-Land Rover deal: the brands were troubled, demand was low. Tata went on to prove everyone wrong. The group's international acquisitions are doing well, some have started making money.
When Tata took over, less than 5% of the group's revenues came from overseas. As the self-consciousness eased, the confidence grew. And with it, the scale of ambition. |
|
|
|
|
|
Ryan Martis
|
|
« Reply #10 on: December 07, 2010, 12:24:22 AM » |
|
 The Ratan Tata of 15 years ago would never have gone for broke on deals like Corus and JLR. The JLR deal was audacious. Tata's interest was sparked as soon as the banks told the group that the marques were available. Why? According to him, "First, as Tata Motors in the number two SUV builder in India, owning [Land Rover] the gold standard of SUVs would be an enormous benefit to us. Second, to own a luxury brand with an immense history and heritage such as Jaguar is a virtually irresistible opportunity."
There's a personal angle to the "immense history": Ratan's father Naval was one of five people in India who took delivery of a new Jaguar XK120 in the late 1940s. "I remember the XK with great nostalgia," Tata commented to a Jaguar team. "I particularly remember the instruments on the dashboard and how stylish they looked."
Less than two weeks after the $3-billion deal was inked, Tata flew into the US on his private jet to meet Jaguar and Rover dealers across the country; for many dealers, it was their first ever interaction with a company executive.
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.
Of course, he's not perfect. Ratan Tata personally, and the Tata Group in general, have been bogged down by their share of controversies. When it comes to the environment, especially, the group gets a "can do better" grade.
In recent years, Tata Steel's joint venture with Larsen & Toubro to construct a port at Dhamra, Orissa, has come under the scanner for its proximity to two protected areas, one of which is the world's largest nesting site for the endangered Olive Ridley Turtle and the other India's second-largest mangrove forest.
A soda ash extraction plant in Tanzania also came under fire because of the threat it poses to a nearby lake and its flamingo population. |
|
|
|
|
|
Ryan Martis
|
|
« Reply #11 on: December 07, 2010, 12:24:31 AM » |
|
 Tribal rights have also been a touchy subject. In 2006, several tribals were killed while protesting a wall being built by Tata Steel on land that was historically theirs. And 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.
Situation vacant
It will be some months before even the shortlist for Ratan's successor is known. It's anybody's guess who will finally make the cut, but the qualities expected of this paragon are fairly clear to all.
In an interview a few years ago, Ratan had drawn up a somewhat simplistic checklist: someone "younger", ideally in his 40s, who believes in Tata values, demonstrates managerial ability and has the vision to run the Tata Group.
More recently, he also spelled out what the person doesn't need to be: a Tata, Parsi, or even Indian. "The successor should be the right person," was his emphasis at the Tata Chemicals AGM in August.
For the record, in its 142-year history, the Tata Group has had only five chairmen, all of whom were Parsis. The only non-Tata to make it to the top was Nowroji Saklatwala, who was chairman from 1932 to 1938. Of course, he was still family: Saklatwala was Jamsetji Tata's sister's son.
"There will be a vacuum if a non-Tata person is at the top. Any new person without the Tata name starts with a huge disadvantage," says Harish Bijoor, brand specialist and CEO of Harish Bijoor Consults.
Still, considering there aren't too many Tatas around anymore, perhaps it does make sense to keep an open mind about candidates from outside the family. But not outside the company, and certainly not outside the country, seems to be the majority opinion.Go to The NEXT Page for More Pictures >>> |
|
|
|
|
|
COOL STOP
