I know roughly as much about the steel business as I do about rocket science. So, when the news of Ratan Tata’s victory in the auction for Corus streamed in on Thursday morning, I should have been bewildered and bemused. Strangely, I was neither.
By some remarkable coincidence, I had interviewed Ratan just as he was on the verge of launching his bid for Corus. And though the subject of the imminent takeover was off-bounds for the interview (because he was about to bid) we spoke a little about the likely shape of events during the portions when the TV cameras were off.
By another coincidence, I interviewed LN Mittal two days before the results of the Corus bid were to be announced (though the interview was only telecast last night) and while LN was suitably cagey about the likely outcome of the bidding, he was quite willing to talk about a potential Tata takeover of one of the best-known steel companies in the world.
On Thursday morning, as the TV channels played and replayed the footage of a tired but relieved Ratan telling the assembled Bombay press that it was a moment of great fulfilment for the Tatas, I thought to myself: why am I not surprised that he has won?
And yet, if you had told me a decade ago that two of the world’s five largest steel companies would be owned by Indians, I would have laughed at you. Two decades ago, you wouldn’t even have dared to suggest it.
In those days, we took the view that Tata Steel was a globally inefficient company that owed its excessive profits to the ineptitude of SAIL. Because steel prices were set high enough to allow the public sector to make a profit, private producers like the Tatas benefited. We knew the Mittals too – LN’s father was a successful Calcutta businessman – but never in our wildest dreams did we ever imagine that the family would reap such global success that LN would become the fifth richest man in the world.
I often wonder: what is it that has made the difference? Why do the same companies that we once thought we knew so well seem so capable of surprising us? Why do the businessmen whose measure we thought we had now seem so much bigger? Has the world changed? Or is it India that has changed?
The broad answer it seems to me is that India has changed much more rapidly than we realise. Smart people have understood the contours of the change quicker than the rest of us. And the successes we see reflected in the headlines come from their understanding of that change.
Superficially, you could not find two men who are more unlike each other than LN Mittal and Ratan Tata.
Ratan is shy, reserved and unwilling to open up unless he knows you well or trusts you. LN is extroverted, easy, charming and able to get an audience eating out of the palm of his hand within minutes. Ratan was born to money and tried to run away from it. He abandoned the huge mansion that his parents lived in to seek refuge in college in America. Circumstances dragged him back to India, but he would have been quite happy to have practised as an architect in the US. LN was not born to money. His father was a self-made man, he was send to a Hindi medium school and the first time he ate with a knife and fork was when, at the age of 17, a rich friend took him to Trinca’s on Calcutta’s Park Street. Far from running away from money, he sprinted towards it.
Even now, their attitudes to wealth are remarkably different. Ratan has lived in the same flat (in Bakhtawar in Bombay’s Colaba area) for over three decades and enjoys the lifestyle of a senior manager in an old-style boxwallah company. LN owns the most expensive house in London, one of the most expensive houses in Delhi (though God knows how much time he spends there), a villa in Saint Moritz, a very nice yacht, several planes and is not shy of extravagance, as anyone who followed the saga of his daughter’s wedding will recognise.
But here’s the thing: when you meet them face to face, you don’t notice the differences as much as you notice the points of similarity. Though they are over a decade apart in age, their attitudes to business have much in common.
LN grew up in the era of iconic Marwari businessmen, of visionaries who had figures at their fingertips and who saw themselves as empire builders. The Tatas, when Ratan took over, were structured like the old British empire. JRD Tata was the King Emperor and his kingdom was governed by viceroys: the Russi Modys, Ajit Kerkars, Darbari Seths and Sumant Mulgaonkars.
When he set about restructuring the Tatas to create a more democratic environment, Ratan was widely criticised. He was dismantling everything that JRD had created, said the critics. But, in retrospect, it is clear that Ratan had seen what other businessmen had not: the days of viceroys and emperors were over. To succeed in the 21st century, you needed a structure that depended more on teamwork than on charismatic leadership.
So it is with LN. Almost all the self-made businessmen I have interviewed tell war stories in which they are portrayed as Napoleonic figures winning a succession of battles to carve out their empires. LN is one of the few millionaires (and he is a billionaire 30 times over) I have met who actually plays down his own role in his success and attributes it to the management of his company. I asked him what his greatest ability was. He did not pick entrepreneurial skill, leadership, an ability to spot trends or any of the things that others brag about. “My success is that I can get along with people and make them work as a team,” he said. “Everybody has the same factories and the same access to information. It is your people that give you the edge. And my skill is that I hire the right people and give them the freedom to work to their full potential.”
The Tatas, it is well known, see themselves as managers and have vested the ownership of their companies in many charitable trusts. Even JRD never saw himself as an owner and Ratan is even clearer about being no more than a manager. But, much to my surprise, LN (who owns 44 per cent of Mittal Arcelor) does not see himself as an owner either. Two weeks ago, I watched him tell an audience of well-heeled YPOs in Bombay, “Remember that I don’t own my company. And nor do you own yours. The company belongs to the shareholders. And if India is to progress, we must learn better corporate governance.” It is a laudable sentiment but not one that you normally associate with family-owned bania companies.
But the greatest similarity comes in worldview. Two decades ago, Ratan Tata decided that it did not matter where you lived. Borders were breaking down. A successful company was one that had spread its risks over at least four or five economies. In the 1980s, he struggled to persuade Tata directors to invest their profits abroad. And from the 1990s onwards, as the laws changed, he pushed the Tatas into overseas acquisitions as far apart as America and Korea. His vision of the Tatas, he kept saying, was of a global company with an Indian heart.
Mittal too is one of the world’s greatest global businessmen, but his heart and his passport are determinedly Indian. Even though he lives in London, his businesses are spread out all over the world, from America to Indonesia to Kazakhstan to Luxembourg. He reckons that the world is too international for a good businessman to stick to any one economy. It doesn’t matter what nationality your business is. What matters is what nationality you are.
And so, it came as no surprise to me that Ratan was able to take over Corus just as LN had taken over Arcelor. The two men have outlooks that are more similar than their personalities may suggest. And in those outlooks lies, I suspect, the key to the future of Indian industry.
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