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New guard takes over

Cyrus Mistry will have to learn on the job, just as Ratan Tata did two decades ago.

india Updated: Dec 28, 2012 02:17 IST

Ratan Tata leaves behind a business empire almost 50 times bigger than what he inherited in 1991. To put this in perspective, India’s gross national product grew 15 times between 1991 and 2011. The Tata group has been the spearhead of India’s integration with the world economy and this shows up in $58 billion of its $100 billion revenue last year flowing in from abroad. If Manmohan Singh was the architect of the country’s reforms, Mr Tata — an architect by training — built a gigantic corporate house with those blueprints. He did it by giving sunrise industries the room to grow: Tata Consultancy Services (TCS) brings in a tenth of India’s software and outsourcing exports. Mr Tata also led the Great Indian Takeover: the group’s turnover vaulted 10 times in the past decade after a string of marquee international acquisitions, including Tetley, Corus and Jaguar-Land Rover. And the Nano turned the world’s attention to frugal Indian engineering that sought billions at the bottom of the pyramid.

Mr Tata came into his inheritance late, but persevered to dispel initial misgivings about being able to shoulder JRD’s legacy. He brought to heel a posse of professional managers, the satrapies have been dissolved and the group has acquired a tighter corporate identity. The Tatas are ahead of the pack in aligning corporate governance with international practices and this serves as a springboard for a new generation of the global Indian manager. Cyrus Mistry, Mr Tata’s successor, will need a vision broad enough to connect the dots between the Nano and the Jaguar in the quest for new markets. Mr Mistry’s credentials of running his own construction business are impressive, and hugely appreciated in Bombay House. He will have had exposure to the Tata way of doing business both as shareholder and director, but there is no experience that prepares anyone to run a group as diverse as this. He will have to learn on the job, just as Mr Tata did a couple of decades ago.

At heart, the Tata group still remains a bricks-and-mortar conglomerate with two-thirds of its business coming from materials and engineering: Tata Steel, Tata Motors, Tata Global Beverages and Tata Chemicals are among the top players globally. The commodity business is prone to regulatory capture across the globe and the terms of trade do not favour manufacturing. India’s first multinational is not as nimble-footed as some of the current stars of the knowledge economy. Yet, in a society where business houses seldom survive the third generation, the House of Tata has kept reinventing itself during most of its 144-year existence. Mr Tata has done quite a bit of it during his watch.