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Ratan Tata, chairman, Tata Sons

Ratan Tata has acquisitive strategy in commercial vehicles and most recently steel has created a buzz about the group.

business Updated: Sep 30, 2005 13:45 IST

Tata Sons chairman Ratan Tata has reinvented the Rs 52,000 crore Tata group into a local focused, global outlook conglomerate. His acquisitive strategy in commercial vehicles and most recently steel has created a buzz about the group.

Last time we met, you spoke about going global after consolidating locally. The house of Tatas is making smart moves globally now - the acquisition of Daewoo's commercial unit followed by the NatSteel acquisition...
A company does not become global by simply participating in geographic markets around the world. The objective of globalization is to become globally competitive, leverage global opportunities and have the required global capabilities. It implies an organization, which employs talented people without reference to nationality. We are in the process of acquiring such a competitive position and global capabilities.

Isn’t it a pleasant coincidence that the group is at its zenith in the centenary year of the founders? Tell us about the future.
If Jamsetji Tata and JRD Tata could transport themselves to today's environment, I think while they would be fairly pleased with the achievements, they would not be entirely satisfied with what they see. They would understand that the Group has a long way to go and much to do, and that we have no reason to sit back and feel complacent.

You once told me that the next chairman of Tata Sons should be fortyfivish. So will Noel Tata succeed you?
All I can say is that succession plans are in place and these will be announced at the right time.

Are you satisfied with what you have managed to do?
If one looks back, there have been some disappointments. Because along the way many things that could have happened, didn’t happen, because changes weren’t made at the right time. It has not been an easy road, and there has been resistance to change. But I am nevertheless pleased with what has been achieved, though much more remains to be done.

The Mistrys control the largest chunk of Tata Sons. How are your relations?
Extremely cordial. Earlier this year, we even extended the term of Mr. Pallonji Mistry on the Board of Tata Sons, keeping in view the exceptional circumstances resulting from the IPO we were contemplating of TCS.

The TCS listing is a story similar to the Indica project; many reckoned that you missed the bus several times in the past. Was it timing or did you clearly have the capital gains problem?

We examined going public at the time of the IT boom. We did a lot of deliberating about whether we should take TCS public at that time, in which case Tata Sons would lose its entire income, or whether we should take Tata Sons public with TCS within it. We spoke to a series of investment bankers.

There was a dilemma at that time: other than Tata Sons getting the money, what other value would we generate? And then there were of course tax issues to be looked at. We are not really sorry that we didn’t go public some years ago, because those issue prices that investors would have paid for at that time would be eroded by about 70 per cent today. The reason that we have now done the IPO is that we have come to realize that in the context of two very visible public companies i.e. Infosys and Wipro, there was a business deterrent for TCS to go seeking business or contemplate acquisitions as a division of a private holding company.

It is increasingly clear that auto, steel, hospitality, software and telecom will be your focus areas. While there is clarity in the first four areas, in telecom, the lines continue to be blurred. Tell us about your telecom strategy?
Tata Teleservices is a company which we own and manage, and we are focusing our investment on CDMA. Idea Cellular is a company where we have a one-third financial stake. It is an entity into which we merged our GSM operations from Andhra Pradesh, which is how we acquired the one-third stake. We started out in 6 circles in CDMA and now have an all-India footprint. Interestingly, if you look at our capital expenditure in rolling out this network, we are benefiting from being in an industry where equipment prices go down with time, rather than up. We are promoting the Indicom brand under which all our telecom offerings will be available. We would like to see this brand emerge as the most preferred service choice of customers.

How does Ratan Tata want to be remembered? As the man who created the people's car, people's hotel or as the man behind the rejig of what is India's oldest industrial house?
As someone who succeeded in an environment of change, and upheld the value system and the ethical standards that our Group was built on. One feels great satisfaction that we have been able to grow and we have been able to achieve what we have without crossing the line that distinguishes ethical practice from some of the things we see around us today.

What is your management style?
I believe in evolution rather than revolution. I am a bit of an optimist. I never feel that something can’t be done. It may take a little time and may not happen quite the way you wanted it to, but I always feel that it can be done. I am a moderate risk taker but I am not risk averse, nor am I a gambler. If I believe in something, I would pursue it vigorously.

Everybody is a dreamer, you seem to have fulfilled many of your dreams. What next?
What would really make me happy is to have people say that we are a Group that provides value for money and that our customer sensitivity is very high. In other words, I have no desire to strive to necessarily be No. 1 in size. But being No. 1 in quality and No. 1 as a corporation in its human and business practices would be really great.

First Published: Sep 30, 2005 13:45 IST