Adieu to Ratan Tata: Remembering a colossus who always stayed calm and warm

His fitting tribute to the country and to fellow patriotic Indians was getting the colonial Britisher's big businesses into an Indian company's fold.
Ratan Tata sits in the cockpit of a F17 fighter plane during the Aero India 2011, India's biggest air show, at Yelahanka Air base in Bangalore.
Ratan Tata sits in the cockpit of a F17 fighter plane during the Aero India 2011, India's biggest air show, at Yelahanka Air base in Bangalore.(Photo | PTI)
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The year was 1992. State-run Indian Airlines (now Tata-owned Air India) ran a poll to pick their most-loved passenger on the Delhi-Bombay route that politicians, industrialists or VIPs frequented. The airline was looking for someone who didn't throw his weight around, troubling the staff.

The winner was none other than Ratan Naval Tata.

Simplicity was one of his many signature traits. Despite managing the country's largest industrial houses, he always remained calm and warm. He ran multi-billion dollar companies, but lived in an ordinary flat, never had an assistant to carry his files, or bags. At the Bombay House, the Tata group headquarters. he would often queue up for the elevators like any other employee.

Known for his punctuality, he would leave the office at half past six and preferred spending the rest of the day in solitude. He was neither into festivals nor formal meetings, and was rarely interested in sightseeing or giving lectures.

His innings with the Tata group began without any fanfare. When he first joined Tata Steel, Jamshedpur as an apprentice in 1962, he wore blue overalls like any other shopfloor worker. Seeing his diligence and hard work, the then Tata Sons chairman Jehangir Ratanji Dadabhoy Tata (JRD) called him back to Bombay, where he lived in a small, independent flat in Colaba, instead of staying at the palatial Tata Palace.

Ratan Tata sits in the cockpit of a F17 fighter plane during the Aero India 2011, India's biggest air show, at Yelahanka Air base in Bangalore.
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One of the first businesses Ratan Tata turned around was the loss-making Express Mills, which was gradually shut. Next, he took over the National Radio and Electronics Company Ltd (NELCO), which produced radios, TVs and other electronics in 1971. At that point, it had 2% market share and was accumulating losses on a Rs 3 crore turnover. Given the fierce competition from reputed brands like Murphy, Videocon, Onida and BPL, he would not have been blamed if he had wound up this business. But Ratan Tata took the challenge upon himself and made it profitable within the next three years. Notwithstanding the Emergency period and scores of union strikes, it went to touch a Rs 200 crore turnover in the next two decades. Incidentally, the NELCO stint also brought him closer to Rajiv Gandhi, who was equally interested in electronics and computers.

His next stint was with Tata Industries, which was handed over to him in 1981. With a turnover of just Rs 60 lakh, it wasn't a significant entity in the Tata stables, but the move created a stir as it was managed by JRD himself until then. JRD also felt that Ratan Tata needed more exposure and experience and though he was keen on grooming him as his successor, he never publicly mentioned it. In hindsight, Ratan Tata seemed glad how JRD handled the succession plan. "Who knows, he may have changed his mind later!"

Ironically, Ratan Tata wasn't JRD's first choice to succeed him. Instead Tata stalwarts like Darbari Seth, Sumant Moolgaokar and Russi Mody, Nusli Wadia and Nani Palkhivala were considered. He was particularly impressed with young Nusli, but the latter declined politely saying, "I am a Wadia and will remain so. I could never become a Tata."

The next choice was the versatile and enthusiastic Mody, whose directness and leadership style appealed to JRD. At one point, he even promoted his name publicly and was keen on handing over Tata Steel and Tata Motors to Mody, setting the stage for the leadership role, but Moolgaokar, who was handling Tata Motors (then TELCO) strongly opposed the move.

Ratan Tata sits in the cockpit of a F17 fighter plane during the Aero India 2011, India's biggest air show, at Yelahanka Air base in Bangalore.
The always endearingly human Ratan Tata

Others too were put off by Mody's arrogance and high-handedness. One incident that did the rounds was how Mody had a verbal argument with a policeman over car parking. When the policeman asked Mody, 'Does this road belong to your father?' To which, Mody showed him a sign, which read, 'Sir Homi Mody Road," and said, "Yes, that's my father. So the road belongs to him."

Eventually on March 25, 1991, an unscheduled board meeting was called and members were first treated with a sumptuous lunch including Parsi delicacies unlike the usual fare from the Taj Hotel. When Lucas, the chef, was asked whether it was anyone's birthday, he replied, "No. JRD is announcing Ratan as his successor."

When JRD handed over the reins, it had 84 companies, of which 39 were listed. With a turnover of Rs 24,000 crore and the pre-tax profit of Rs 2,100 crore, they together paid taxes worth Rs 3,500 crore. It had 26 lakh shareholders, and 2.7 lakh employees.

The early confrontations

Soon after taking over the reins from JRD, the first confrontation came from none other than Russi Mody, whose media interactions caused untold embarrassment. who even boycotted JRD's meeting that named Ratan Tata as his successor. Among all, the biggest endorsement for Tata came from Pallonji Shapooji Mistry, who assured JRD that he will stand by Ratan Tata.

Matters precipitated soon when Mody made a significant organizational change in Tata Steel without the approval of the board. With no option left, Ratan Tata began exploring legal options to oust Mody and made his first comment on the episode: "The Managing director either agrees with the views of the board or resigns." Mody didn't want to do either. So he flew to Delhi from London and sought the help of the then Prime Minister P V Narasimha Rao and Finance Minister Manmohan Singh. When they declined to intervene, he called for a truce, paving the way for Ratan Tata to take over as Tata Steel's chairman.

But there was another killer blow, which Ratan Tata landed at a board meeting in 1992, fixing a retirement age of 65 for managing directors and 75 for chairmen. There was resistance and Ratan Tata was criticised for the 'devious' plan to remove the top bosses. Mody compared Ratan Tata to a circus performer and predicted doomsday for the Group, but the latter maintained his trademark calm and eventually Mody hanged up his boots.

One of the other controversial decisions Ratan Tata took soon after taking over the reins, was to increase the Tata family shareholding in group companies. Until then, Tatas had minority stakes in most group entities. For instance, in Tata Steel, they held just 2.4% stake, while the Birla family owned over 6%. Likewise, the promoters had just 3% stake in Tata Motors, 12% in Indian Hotels, 18% in Voltas, and 19% each in Tata Oil and Tata Chemicals.

Ratan Tata sits in the cockpit of a F17 fighter plane during the Aero India 2011, India's biggest air show, at Yelahanka Air base in Bangalore.
Ratan Tata: A great leader who valued trust, reputation and pride above money

Though all the group companies were controlled by the holding entity Tata Sons, 81% stake was with various trusts. The Pallonji's held the largest individual stake at 17.5%, while the Tata's held a mere 1.5%. Unbelievably, state-run LIC, UTI, IDBI Bank and others held more shares than the promoters. In other words, these companies were in a theoretical danger of aggressive, hostile takeovers.

So, Ratan Tata decided to increase the shareholding across all companies and proposed a royalty charge from all group and associate firms for the use of the Tata brand. The Tata Brand Equity agreement categorized the companies into two tiers – companies that used the Tata name directly, and had a strong association with the Tata name; and companies that did not use the Tata name directly. The companies were classified into categories with the first tier contributing 0.25% of turnover, or 5% of profit before tax, whichever was less, followed by the second rung that would contribute 0.15% of the turnover.

The move sparked a wave of unrest and opposition from the old guard. Nani Palkhivala, the then chairman of ACC, declared that while ACC was a close associate of the group, it wasn't a Tata Group company. Ajit Kerkar, chairman and managing director of Indian Hotels argued the company had never used the Tata name and hence did not owe a fee to Tata Sons.

Yet, Ratan Tata stuck to the script stating that he wasn't gathering cash for profits but to ensure that the group companies were safe from a predatory takeover. "If you are to fight a Mitsubishi or an X or Y in the free India of tomorrow, you better have one rather than 40 brands. You better have the ability to promote that brand in a meaningful manner," he reasoned.

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A glorious innings

As for business proposals, one of the first major projects Ratan Tata launched was the indigenous car project in 1992. Noted brands like Premier, Ambassador and Maruti Suzuki were already dominating the market and Tata's proposal was roundly criticized as the concept of a completely Made in India car was unheard of.

He set aside Rs 1,700 crore to fulfil his desire to produce a car that was as elegant as the Maruti Zen and as spacious as the Ambassador with sufficient boot space, but as affordable as the Maruti 800. He personally urged auto component manufacturers to join hands in creating India's first indigenous car and identified about 600 vendors (nearly 300 were based in Pune alone) to make 3,800-odd parts within the country, generating over 12,000 new jobs.

In a short time, he even put together the best design engineering team, provided them with advanced CAD technology, which wasn't heard of India until then, and equipped them with 225 computers to create a world-class product that had 98% of the parts Made in India.

The icing on the cake was when he got hold of Nissan's unused plant in Australia for as little as Rs 100 crore, transported it lock, stock and barrel and reinstalled it in Pune within the next six months. The entire assembly line was shipped to India in 16 container ships, having 650 containers and weighing some 14,800 tonnes. As a bonus, the reassembled plant was further equipped with 450 robots.

Finally, the D-day arrived on 28 December, 1998. At the bi-annual car exhibition at Pragati Maidan, Delhi Tata Motor's stall stood out. The models wore sarees, men sported turbans and school children waved the Indian flag when the car arrived, driven by Ratan Tata himself. It was Made in India, but looked no less than an imported car, which prompted Murasoli Maran, the Union industries minister to exclaim: ‘Wow! This is Kohinoor on wheels.’

With pride, Ratan Tata announced the name: Indica! The timing of the launch was also opportune enough. The government was fighting a legal battle with Maruti Suzuki over ownership and the Tatas had given Indians an alternative. In no time, it broke records, turning in over 1.25 lakh bookings. The first car was assembled in eight days, but the next one took just one day. As it picked up speed, the plant was producing one car every fifty-six seconds! This was in 1999.

Unfortunately though, the car ran into glitches and became the subject of controversy. Amid customers' ire, critics pounded on the company for lack of experience in manufacturing a passenger car. Tata Motors spent another Rs 500 crore to tide over the glitches, but without losing hope Ratan Tata vowed to do ‘whatever it takes to make Indica trouble-free' again. When the second model, the Indica V2, was launched, it became a roaring success, changing the fortunes of Tata Motors altogether.

An emboldened Tata, didn't look back and rolled out several models, including commercial vehicles. But that didn't quench Ratan Tata's quest and it was time to launch his dream project -- the Rs 1 lakh car.

This project too faced multiple challenges. First, multinational vendors and auto component makers weren't fully convinced. When they finally came on board, it suffered another existential blow when the 1,000-acre land allotted by the West Bengal government faced local's wrath. The plant was eventually shifted to Sanand, Gujarat and finally, on 23 March 2009, amid a charged atmosphere, Ratan Tata drove the first Nano. Though it did have its moments, the Nano wasn't as successful as the Indica and production grounded to a complete halt.

During his tenure, the group also carried out some of corporate India's biggest cross-border acquisitions namely the tea major Tetley, steel major Corus Steel and luxury car maker Jaguar Land Rover (JLR). One time, Ratan Tata said: "I have felt for some time that we have been an inward looking group. We could have gone overseas much earlier; the Aditya Birla Group did that many years ago. But we were very obsessed with ourselves in India. And I suddenly felt — certainly when I started to sit on boards overseas — very conspicuous by the fact that we were only in India."

Ratan Tata sits in the cockpit of a F17 fighter plane during the Aero India 2011, India's biggest air show, at Yelahanka Air base in Bangalore.
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If JRD’s contribution to the Tata stables was Air India, Ratan Tata's were notably the Indica, and the Nano. But his fitting tribute to the country and to fellow patriotic Indians was getting the colonial Britisher's big businesses including JLR, Corus and Tetley Tea into an Indian company's fold. Thanks to his overseas ventures, Tata, which was earlier known as an Indian company, was soon drawing over 60% of the group’s turnover from businesses abroad.

Stepping away

As decades passed, there was speculation that when his own turn came, Ratan Tata would not stand by the retirement rule himself. But he proved his detractors wrong. ‘I don’t intend to come to the company’s headquarters on a wheelchair,’ he quipped and began the heir hunt three years before his retirement age.

When he took over the reins from JRD, many doubted his ability to steer the group. Not only did he manage do that, Ratan Tata helped increase the group's revenues from $6 billion to $100 billion, taking Tata's market capitalisation from $9.51 billion to $91.22 billion.

When he stepping down in 2012, the group employed over 7 lakh and had several formidable performers: Tata Steel was one of the largest steel producers in the world; Tata Motors’ portfolio was complete with trucks, passenger cars and luxury vehicles; Tata Consultancy Services was among the world's top ten software services providers; Tata Global Beverages was a global major in tea; Titan, apart from sustaining its leadership of the Indian watch market, had emerged as the market leader in jewellery businesses in India.

Disclosure: The article draws heavily from three sources: The TATAs - How a family built a business and a nation, by Girish Kuber, Leading the Tata Group (A): The Ratan Tata years, an IIM-Bangalore report by K S Manikandan, K Rajyalakshmi and J Ramachandran and A Complete Biography of Ratan Tata, by A K Gandhi.

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