Mr Indispensable: Why Tata Group just can’t say goodbye to Ratan Tata
Business behemoth turns to him at a time of transition that arises now that it has decided to replace Cyrus Mistry as chairman.Cyrus Mistry Exit Updated: Oct 25, 2016 20:50 IST
Ratan Tata took charge of the Tata Group, India’s largest business conglomerate, in 1991, when its various parts were controlled by the so-called satraps: powerful CEOs who ran their companies like a fief. Ratan made them fall in line and made the group cohesive, modern, and agile.
No wonder the group turns to him at a time of transition that arises now that it has decided to replace Cyrus Mistryas chairman. That and the fact that Ratan heads Tata Trusts, which together control the largest chunk of equity in Tata Sons, though Mistry’s father Pallonji remains the single-largest individual shareholder.
Ratan joined the group in 1962 as an apprentice at the company’s steel plant in Jamshedpur. After toiling for nine years, he was asked to take over operations of the National Radio and Electronics (Nelco)--makers of radios, radiograms and some other engineering products. Nelco was in a bad shape, running up a 40% loss. Ratan was on the verge of turning it around when the group shut it down, and Tata left for higher studies abroad.
He joined the group again in 1977, to revive its ailing Express Mills, which was in the grip of unruly workers unions. That was the time unions, led by Datta Samant, were holding mill owners to ransom. As other mills shut down, Express Mills remained afloat for the next nine years.
In 1991, JRD Tata named Ratan his successor. JRD told his biographer, R M Lala: “... because of his memory. Ratan will be more like me.”
Years later Bombay House, the headquarters of the Tata Group, shows a lot of what Tata has created.
Before handing over the mantle to Mistry in December 2012, the revenue of the Tata Group was Rs 4,75,721 crore, up from Rs 10,000 crore when he took charge in 1991. Net profits had grown 52 times.
In many ways, Ratan’s rise ran parallel to the rise of the Indian economy. As the economy grew, became more open, and embraced foreign companies, the Tata Group grew, entered new businesses such as software, and led the march of Indian companies to acquire foreign entities.
In 2007, when the demand of steel in the European market was at an all-time high, the Tata Group picked up Anglo-Dutch steel maker Corus for $13 billion. The deal hasn’t been the best one as Corus is now on sale, but shows how Tata isn’t risk-averse.
Tata Motors bought the loss-making Jaguar Land Rover business from Ford and turned it profitable, and saved thousands of jobs in the UK factories. JLR alone makes more profits than what Tata paid to acquire the company.
Ratan is also a visionary, alongside being an able business leader. In 2005 he thought of making the cheapest car in the world, and brought out the Nano at an entry price of Rs 1 lakh.
Just before he stepped down, two business he helped the group foray into was airlines with partnerships with AirAsia and Singapore Airlines; and a joint venture with US-based coffee maker Starbucks.
After his retirement Ratan turned into a venture capitalists and has invested in close to 30 startups, and mentors them, and helps them evolve. Some of his companies are Snapdeal, Ola, Paytm and CarDekho--that helps him keep his pulse on the changing world of technology and new businesses.
To find a replacement for Mistry may be Ratan’s trickiest challenge yet, since it will be akin to finding a replacement for himself a second time. Ratan headed the search panel that had decided to make Mistry the boss. Now he heads the panel that searches for Mistry’s replacement.