New Delhi: Six years ago, at the 2003 Geneva Motor Show, Ratan Tata unveiled plans to launch a car that would cost just Rs1 lakh. The reaction was pure disbelief. Privately, many rival car makers—Indian and foreign—ridiculed the idea as being impossible to achieve. That, of course, was the least of the challenges that Tata has faced in his efforts to make his dream come true. Last year, the Nano project nearly got derailed when fiery protests erupted in West Bengal, the original site for the car factory. Gujarat quickly replaced West Bengal and, save for the minor hiccup of a delay, the project was safe. Today, as the Nano is launched, Ratan Tata’s big dream is being fulfilled.
The Nano apart, the past 18 years that he has been at the helm of the Rs1.5 trillion group have been a series of challenges for Tata, making his stint as chairman not unlike the experience of a man running the gauntlet. Take 1991, when he got his current job. He was then 54, hardly a spring chicken, but ran into a face-off with the “old guard” at Bombay House, the group’s headquarters. When he tried to implement the group’s retirement policy for chief executives and directors, it turned into a very public spat with Russi Mody, former boss of Tata Steel Ltd. In those early years, much of Tata’s challenges were internal. Satraps such as Mody, Darbari Seth and Ajit Kerkar dominated the group and many of Tata’s strategies and plans faced resistance. Yet, Tata soldiered on till one by one the old guards fell in line and exited.
Then came the challenge of restructuring what had become a sprawling, cumbersome group. Tata’s ascendance to the top job coincided with India’s newly liberalized economic policies and in the emerging environment many of the group’s businesses were unviable, while others were unwieldy. Firms such as Tata Oil Mills Co. Ltd and Lakme that were in the consumer goods businesses were sold off. Lumbering giants such as Tata Steel were in dire need of being pruned to become more efficient and many other firms needed a close, hard look.
Those early years were not easy for Tata. While younger business groups made the most of the 1990s, grabbing new growth opportunities, Tata had to spend a major part of the decade setting the house in order. Besides putting the retirement policy for the old satraps in place, his other task was to increase the group’s shareholding and, hence, its control over firms in its fold.
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Still, Tata wanted to take the group global—acquire international businesses and operate in unfamiliar markets. One dominating dream was to make cars, something Tata has always been passionate about. Transforming Telco (now Tata Motors Ltd) from making trucks and commercial vehicles into a car maker wasn’t an easy challenge and like the stages of evolution, Tata set about the task in phases—first building pseudo cars such as the Sierra and the Estate, which were only a step ahead of trucks, in the early 1990s to 1995 when he announced the first truly Indian car that he famously said would be “a car with the Zen’s size, the Ambassador’s internal dimensions, the price of a Maruti 800 and with the running cost of diesel”. That was the Indica, which hit the roads in 1998 and became an almost overnight success.
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Since 2000, Tata has turned his attention to global markets, pulling off ambitious acquisitions, such as UK’s Tetley Tea, several hotels, telecom firms and steel businesses. But the biggest of them was 2007’s buyout of UK-based steel maker, the Corus Group Plc., for which the Tata group paid $12 billion. More recently, in March 2008, the Tatas bought Jaguar and Land Rover, paying $2.3 billion for those famous automobile brands.
Acquisitions such as these as well as the group’s pioneering efforts in information technology services globally have made Tata the most widely known Indian brand in the world. But it has also thrown up another challenge for the group. To finance the spate of high-value takeovers, the Tata group’s companies have had to borrow heavily, expecting, of course, that the higher profits generated by the new businesses would help pay back the debt. It is estimated that Rs1 trillion of debt lies on the books of the major Tata companies. The fact that the group earns at least 60% of its revenues from global markets makes it highly geared to the global economy, which is in the throes of the worst recession in many decades.
At 71, Ratan Tata is in the twilight of a career that has been a series of challenges. And while his achievements at Tata group have been remarkable, one cannot but help feeling that he has been unlucky as well. If instead of being given the reins of the group at 54, he’d got a shy at it 10 years before that, would his script for the Tata group story that we’ve seen unfold have been different? As the Nano rolls out on India’s dusty streets and Ratan Tata mulls about who will succeed him, perhaps the same thought may cross his mind.
Sanjoy Narayan is editor-in-chief of the Hindustan Times. Respond to this column at firstname.lastname@example.org
Graphics by Ahmed Raza Khan/Mint