Home / Companies / Ratan Tata reveals his post-retirement plans

New Delhi: Ratan Tata, the chairman of Tata Sons Ltd, said his group hasn’t been “innovative enough" to reach as many customers as he hoped it would.

“Internally, I have not been able to create an open, flat and transparent organization. I think we haven’t been able to succeed in embracing the customers as we could, although we have moved in that direction from being a manufacturing company in a seller’s market," Tata said in an interview with Charlie Rose that was aired on 6 July. Tata, 74, who will step down as head of the company in December, spoke on topics ranging from cars to philanthropy.

New goals: Ratan Tata, chairman of Tata Sons. Vivek Prakash/Reuters

While employees at the group want to give a grand farewell to the man who has taken the conglomerate from around $10 billion in revenue when he took over in 1991 to around $100 billion now, Tata, who will continue to serve as chairman of the trust that is the Tata Sons promoter, is in no mood to take a break after 28 December, his last day in the corner room, and his 75th birthday. Interestingly, Tata shares his birthday with Dhirubhai Ambani, the late founder of the Reliance group.

In his interview to Rose, Tata said he plans to focus on rural development, water conservation and child nutrition after he steps down as chairman of Tata Sons. “My most visible goal is to do something in nutrition to children in India, and pregnant mothers," Tata said. “Because that would change the mental and physical health of our population in years to come."

In the 2005 National Family Health Survey, when India last weighed, measured and counted its children for signs of hunger, it found 46%—31 million— weighed too little for their ages. In 1999, that number was 47%.

Lack of water and power are stumbling blocks in India’s path to progress, the reason Tata plans to focus on conserving the life-sustaining liquid.

Water demand in India’s large cities is expected to rise by almost 80 billion cu. m, or 40% more than current urban global levels, McKinsey Global Institute said in a report on 28 June. Peak power supply shortfall was 8.6% in the three months to 30 June, according to the Central Electricity Authority. “I’ve often felt that the Indian tiger has not been unleashed," Tata said.

The man who joined the family business by accident—he initially wanted be an architect and live in the US—said the group had not forgotten its values and ethical systems in the pursuit of growth. “We have retained those values and while not succumbing to the subjective pressures that exist to get things done."

Tata Motors Ltd, maker of the world’s cheapest car, the Nano, is turning to China to buy auto parts unavailable in India as it seeks to offer vehicles with automatic transmission at home, Tata said.

Tata, who led the truck maker’s move to manufacture cars in 1999 and purchased Jaguar Land Rover in 2008, is seeking to offer a wider choice to entice customers as competition from Toyota Motor Corp. and Ford Motor Co. intensifies at home. Profit at the company’s Indian unit fell to its lowest in three years in the 12 months ended 31 March.

Sourcing from China would be the only way forward for Tata given that an Indian supplier may not be willing to build something like an automatic transmission unless the volumes were high enough, said Deepesh Rathore, the New Delhi-based managing director of IHS Automotive in India.

Tata Motors’ domestic business doesn’t produce any automatic transmission vehicle, according to its website, while Maruti Suzuki India Ltd, India’s biggest car maker by volume, offers five automatic variants of the 15 models it sells. Hyundai Motor Co., India’s second largest car maker, offers the technology on most of its eight models.

Tata said the company may benefit from the “unbelievable" prices at Chinese component makers. The company will buy sub-assemblies including automatic transmissions from neighbouring China, he said.

Tata Motors shares have risen 35% this year, buoyed by record sales at its Jaguar and Land Rover units, making it the third best performer in the 26-member MSCI Emerging Markets Automobiles and Components Index. It was little changed at 240.20 on Monday in Mumbai.

Ratan Tata’s move to purchase Jaguar for $2.5 billion helped Tata Motors, the biggest company in India’s largest business group, expand overseas and tap sales in China. China is the largest auto maker and auto market in the world and it’s going to get even more dominant than it is today, Tata, who will be succeeded by Cyrus Mistry, said in the interview. China has produced cars that in fact exceed what India did in the same period of time, he said. Sales of Jaguar and Land Rover in emerging markets including China helped the firm more than double consolidated profit to a record 6,230 crore in the year to March.

At Tata Motors, Mistry will need to decide whether the company wants to continue making passenger cars at home or exit the business, said IHS’s Rathore. Market share at the company that sells vehicles including the Indica, Sumo and Indigo fell to 13% in 2011 from 16% in 2007. Profit at the local operations of the company fell 31% to 1,240 crore in the year ended March.

Siddharth Philip is with Bloomberg.


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