Mumbai: Ratan Naval Tata bid farewell on Friday to the Tata group with some words of warning, advice and encouragement to his successor Cyrus P. Mistry and the 456,000 employees of the conglomerate he helmed for 21 years.
“There will be great pressure on Tata Group companies to reinvent themselves in terms of business processes and to dramatically reduce costs, to be more aggressive in the market place and to widen our product range to better address consumer needs,” Tata wrote in a farewell letter to employees on his 75th birthday.
In the letter, a copy of which was reviewed by Mint, he warned that the current difficult economic environment was likely to stretch into the new year, and constraints in consumer demand, over-capacity and increased competition from imports would continue to test the group companies.
But Tata ended the letter on an upbeat note.
“This seemingly gloomy picture however will be a passing phase,” he wrote. “I feel confident that the robust growth that India has shown over the past several years will be re-established and the strong fundamentals in the country will result in India once again taking its place as one of the economic success stories of the region.”
“The Tata Group will undoubtedly play an important role in the continued development of our country, providing leadership in various industrial segments in which they operate and living by the value systems and ethical standards on which our Group was founded,” he wrote.
An emotional Tata recounted the “amazing spirit” and “dedication” of the people who, under his leadership, helped the Tata group achieve revenue in excess of $100 billion (the first Indian conglomerate to do so; around Rs.5.5 trillion today), an increase of 20 times in as many years.
Tata thanked employees for “the enormous support and faith reposed” in him, even as the group faced crises such as “adverse market conditions, natural calamities like earthquakes and tsunamis and gruesome acts of terrorism”.
The last was a reference to the November 2008 terrorist attacks on Mumbai by gunmen who targeted the Taj hotel run by the group, among other city landmarks. While terrorists opened gunfire at guests and bombed sections of the hotel, some of its employees helped guests escape at the cost of their own lives and those of their family members.
“The memories of personal sacrifices, loyalty and individual acts of heroism will always remain in my memory, to reinforce the great sense of pride I have in having been a member of this team,” Tata said.
Tata’s letter spoke of the present challenges facing the Tata group, some of which may not have been completely addressed during his time at Bombay House, the group’s headquarters.
“We will also need to contain our borrowings and work hard to retain our margins,” Tata said.
While the group has grown over the years through the acquisition route, snapping up large companies outside of India, its debt pile has also grown. It has debt of $26 billion (around Rs.1.4 trillion today). On the other hand, the 20 listed group companies have a combined net worth of Rs.1.43 trillion, and cash and cash equivalents of Rs.36,289.38 crore.
Tata requested employees to extend to his successor, the 44-year-old Mistry, the same support, commitment and understanding he received from them during his tenure. He signed off the letter: “Yours sincerely, Ratan N Tata, Chairman, Tata Sons.”
Tata stayed away from the limelight on Friday, his last day in office, even though there was a large media presence outside Bombay House on expectations that he may arrive there.
For Tata, it’s a ritual to be in Pune every year on his birthday and spend the year-end there. Through a Twitter post late evening on Friday, Tata let the world know that he was spending the day with his shop floor colleagues at Tata Motors Ltd’s manufacturing facilities in Pune “to say farewell” to them.
Tata Motors is a company very close to Tata’s heart. One of the largest innovations that Tata was involved with during his stint at the group was the Nano, the world’s cheapest car, developed for the mass market. One of the group’s more successful acquisitions in recent times has been the British car maker Jaguar Land Rover, which is a part of Tata Motors.
“We have been together in good times and bad and have gained a closeness based on mutual trust,” Tata said about Tata Motors’ employees on Twitter. “Going through the plants and receiving greetings from so many colleagues is a great emotional experience.”