The Bombay House biz wiz
The 70-yr-old Tata is forging ahead in global business with finesse and steely resolve, writes Arun Kumar.india Updated: Feb 03, 2007 15:04 IST
The late patriarch JRD Tata, ambitious as he was, could not have foreseen that the industrial group he had built so painstakingly would be taken to such heights by his chosen successor.
The conquest of Anglo-Dutch steel maker Corus Group plc by Tata Steel under Ratan Tata’s leadership this week is a giant achievement, even by the Tata group’s standards.
About 15 years ago, when JRD decided to pass the baton on to the then 53-year-old Ratan Tata, his close lieutenants had opposed the move: Ratan Tata was too young and inexperienced, they said.
The old guard at Bombay House — Rusi Mody, Darbari Seth and Ajit Kerkar, in charge of steel, chemicals and hospitality respectively — had their own vision for the company .
But the suave and soft-spoken Ratan Tata was determined to take the group to new heights.
In one of the biggest gambles of his life, Ratan Tata put everything at stake at Tata Motors to give the country its first indigenously manufactured ‘people’s car’.
At a time when foreign carmakers were confidently raising their grip on the Indian market, Tata went ahead with his grandiose vision and the result, the ubiquitous Indica, is on Indian roads and select export markets. It was, for Tata, the first indication that he could take on foreign competitors.
Ratan Tata articulated his vision for the salt-to-software group with 86 companies in three phases over 15 years. In the first phase, he was primarily engaged in cleaning the empire’s Augean stables that comprised slothful chieftains who drained resources and ran personal fiefdoms. Next, he started scouting around for management professionals.
In the second phase, Tata put together a management team that combined Indian traits with global vision. The Tatas had a strong management cadre and were known to groom management graduates from the Tata Administrative Services.
But there was need for fresh blood and thinking, which came from the likes of R Gopalakrishnan, Kishore Chaukar and Allen Rosling along with inhouse bosses: JJ Irani, Ishaat Hussain, NA Soonawala and RK Krishna Kumar.
"The biggest change that is happening on a continuous basis is that of distribution of leadership. It’s like someone creating a 100 piece orchestra," says Gopalakrishnan, executive director at Tata Sons, the group’s holding company into which he moved from Hindustan Lever.
"Ratan Tata has the unique ability to smell the winds of globalisation much be fore many of us,” says Krishna Kumar, vice-chairman, India Hotels.
"The changes that the Tata Group has undergone is entirely in sync with globalisation. The chairman’s initiatives are in response to the winds of change that have been blowing ever since the Berlin Wall fell," he adds.
Designs on the world Following the management shakeup, Ratan Tata unleashed the tiger. This was the beginning of the third phase. After 2000, the Tata empire has gone on a shopping spree across the world.
The mandate was clear. Each business segment should be strong enough to survive and thrive in the global market.
Gopalakrishnan says, "Ratan Tata gives his team the licence to be bold. But no major de cisions will happen without consultation."
Nobody, for instance, now raises eye brows about the feasibility of the ‘people’s car’ in the price bracket of Rs one lakh.
Ratan Tata is man of determination, says investment banker Uday Kotak. "Nothing he says is casual or off-hand. When he speaks, he means business."
The Corus deal, adds Kotak, is the biggest example of Tata’s “courage and vision, which made India proud and a force to reckon with in the glob al canvas”.
So, what makes Ratan Tata so confident?
Industry observers say Tata not only preaches ethics and corporate governance, but implements them in letter and spirit. He has the ability to call a spade a spade. Much before ‘corporate governance' became a catch phrase with India Inc, Tata did not hesitate to file a criminal case against one of his perceived close lieutenants and a top executive of the group for allegedly defrauding one of his companies.
New frontiers have also been nurtured. FC Kohli and JRD Tata created a hen that laid the golden eggs - Tata Consultancy Services (TCS), the country’s biggest soft ware company, which was listed on Indian bourses in 2004. Before its listing, it was a cash cow for Tata Sons.
Now, Tata Sons' holding of 80 per cent in TCS, which has a market capitalisation of Rs 1,26,500 crore is worth over Rs 1,00,000 crore. A marginal dilution can generate enough cash for Tata Sons to gobble up many companies through a leveraged buyout route using the acquired com pany’s assets to pay for the acquisition.
Throughout his career, which began with his role as a management trainee in Tata Steel, Ratan Tata has displayed enormous courage in taking assignments that others had written off — even before they had taken off.
“Ratan Tata has a great risk-taking abil ity. He has a strong sense of what is right and what is wrong,” says Alan Rosling, executive director, Tata Sons.
"He always en courages his managers to come forward and express their views rather than impose his decision." India first Tata is fiercely patriotic. During 1998, he personally stepped in to douse a nation wide rumour that there was a shortage of salt. The rumour led to panic buying and a price rise.
Tata issued full-page advertisements stating that there was no supply crisis and that he would personally ensure that the company met the demand.
His perseverance and determination is best epitomised in what he recently said in an interview. "I am, unfortunately, a person who has often said you put a gun to my head and pull the trigger or take the gun away, I won’t move my head."
Ratan Tata is said to protect his privacy, integrity and patriotism in equal measure. After gobbling up Corus, he has his work cut out. As non-executive chairman, the 70-yr-old has already handed over the day-to-day running of the empire to chosen managers, but there is little doubt that his vision will be sought after — and provided.
Given that the Tatas now have a finger in many global pies, the big man of Bombay House will continue to move his fingers to conduct his corporate orchestra.