The quiet man of Indian big business finds his voice
It was a cool day in the middle of last month when Ratan Tata, 73, the chairman of Tata Sons, the promoter company of the Tata group, India’s largest conglomerate, dropped his first bombshell. In a public lecture, Mr Tata described his group’s plan in the 1990s to start an airline in India in collaboration with Singapore Airlines.
They went through three governments and three prime ministers for clearance with no avail because, he said, Tata were unwilling to pay a 150 million rupee (Dh12.2m) bribe. Mr Tata’s remarks were particularly poignant because JRD Tata, the founder of the Tata Group, began the airline that is now Air India, the state-owned carrier.
Why is Ratan Tata speaking out now? He is hardly the outspoken corporate crusader; his style is quiet and formal and it is without much fanfare that he has raised the fortunes of the group he took charge of in 1991 from an approximately US$2 billion (Dh7.34bn) company to one with revenues of $67.4bn today.
Unlike Mukesh Ambani, the chairman of the giant Reliance Industries, Mr Tata is not flamboyant. He would consider Mr Ambani’s $2bn home unnecessarily extravagant. Unlike the Infosys founders Narayana Murthy and Nandan Nilekani, Mr Tata is not easily accessible to the press.
Unlike the younger entrepreneurs who lambast Indian red-tape every chance they get, Mr Tata was never feisty in public. Until recently.
The reticent chairman is going out on a limb these days. He has spoken out against the government several times in the past weeks, calling India a “banana republic”, ruing India’s poor moral compass and the morass of corruption that is commonplace in the public sector these days.
He has filed a writ petition to India’s Supreme Court, seeking that the government probe the leak of taped conversations between him and the corporate lobbyist Nira Radia, in which he and Ms Radia discuss, among other things, the former telecom minister A Raja and Ms Radia’s desire to accompany Mr Tata to a black-tie event wearing a Roberto C
He has filed a writ petition to India’s Supreme Court, seeking that the government probe the leak of taped conversations between him and the corporate lobbyist Nira Radia, in which he and Ms Radia discuss, among other things, the former telecom minister A Raja and Ms Radia’s desire to accompany Mr Tata to a black-tie event wearing a Roberto Cavalli dress.
He has filed a writ petition to India’s Supreme Court, seeking that the government probe the leak of taped conversations between him and the corporate lobbyist Nira Radia, in which he and Ms Radia discuss, among other things, the former telecom minister A Raja and Ms Radia’s desire to accompany Mr Tata to a black-tie event wearing a Roberto Cavalli dress.
The tapes have provided fodder for much of India’s urban elite these past two weeks and now Mr Tata has moved to have them blocked, stating they are an infringement of his right to privacy. Some, however, think that Mr Tata’s motives are not so benign.
“What these tapes are doing is that they are unravelling the carefully manicured ‘above-the-fray’ image that the Tatas have managed to portray in the otherwise messy nexus of big business, big media and big government in India,” says Ravi Bapna, a professor at both the University of Minnesota’s Carlson School of Management and the Indian School of Business.
Others speculate that Mr Tata’s recent outspokenness is prompted by his plans to retire in the near future. “Leaderships mature over tenures,” says the brand strategist Harish Bijoor.
“Ratan Tata has moved from being a leader grappling with issues in-house – regional satraps [governors] who headed individual companies following individual styles of governance, to a stage where Mr Tata is being looked up to as one who governs the attitude of Indian business houses at large.”
After a spectacular 20-year stint as head of the Tata group, Mr Tata plans to step down in 2012 when he turns 75. A five-member committee has been formed to identify a replacement. The names being bandied about have spent their careers abroad.
Which brings us to the next point: is the Tata group considering leaving India? Is Ratan Tata’s growing disenchantment with the Indian business climate an indicator of where the group is headed?
Probably not, because Mr Tata has repeatedly said he would like the group to be an India-based multinational, unlike, say Vedanta or even the Mittal group, which have Indian roots but are based in the UK.
The numbers speak differently though: most of the Tata group’s recent and high-profile acquisitions – such as Corus, Jaguar Land Rover, General Chemical, Tetley, Brunner Mond, Daewoo, NatSteel – have been abroad.
The Tata group’s revenues for 2009-2010 from its international operations were $38.4bn, which constitutes 57 per cent of its total revenues of $67.4bn. Various companies in the Tata group now depend on international revenues as a significant part of their balance sheet.
Tata Motors reports that its global sales grew 18 per cent in October compared with the same month last year, while sales of the Nano at home, Tata’s affordably priced car, are languishing.
The Taj group of hotels, which is owned by Tata, has been buying properties abroad, including the Pierre in New York, the renamed Taj Boston and the Blue in Sydney. Last month, the Tata group donated US$50m to the Harvard Business School where Mr Tata studied. The last move may merely be symbolic but they all point away from India.
Numbers, though, can be read both ways. For every statistic that shows the Tata group’s profitability outside India, there are others that point to thriving domestic business, particularly in the core manufacturing sectors.
The most ominous sign, to my mind, is Mr Tata’s recent vexation with the Indian business culture. “Ratan Tata is one of the few gentlemen among many industrialists who are crooks and manipulators,” says Kishore Mariwala,who spent his career with his family-owned conglomerate The Marico group.
“I am sure he is just fed up, like many other decent citizens of India who are fed up, with the dishonesty and hypocrisy of powers that be.”
Perhaps I am reading too much into Mr Tata’s remarks but it would be a shame if Tata – both the man and the company – became global instead of local. Tata may not need India but India needs the Tatas.
Shoba Narayan is a writer in Bangalore and the author of Monsoon Diary
Tata group is going to be an Indian based one. Don’t worry about that. There is nothing wrong in expanding business overseas and gaining profits.
Now start worrying about corrupt politicians and their Swiss bank accounts. India needs MONEY!!! doesn’t it?
I agree. Professor R. Vaidyanathan of IIM B told me about Swiss banks and black money overseas.
Tata group is going to be an Indian based one. Don’t worry about that. There is nothing wrong in expanding business overseas and gaining profits.
Now start worrying about corrupt politicians and their Swiss bank accounts. India needs MONEY!!! doesn’t it?
I agree. Professor R. Vaidyanathan of IIM B told me about Swiss banks and black money overseas.
I’m having mixed feelings about writing a criticism of Ratan Tata. But I am tired of seeing the standard common pieces of servile and waxing praise, and would like to offer an alternative view point.
For starters Ratan had no intentions of returning to India in the first place. He had taken a job in the US and planned to stay there. He returned to his ailing grandmother Navajbai and not to serve the country. The house of Tata is based on Zoroastrian virtues (Hukta, Humta, Huvasta), an agiary, rather than a business house. Even their service activites have the hint of elitism. Tata social science institute, cancer institute, Dorab Tata for advanced foreign education – these are rich men’s problems. Apparently Jamsetji’s idea was that Indians would need to govern themselves and would end up suffering from depression and cancer. I am not thrashing the old man needlessly, but surely it was plain that there was no real dearth of governing talent. After all the British trained, now indigenous, civil service corps, highly educated Indians, were more than capable of governing farmers and laborers. No, the real problems facing India in the 60s and 70s were food shortage, education, poor-man diseases (cholera, malaria, tuberculosis etc) and a visionary statesman would have done well to establish a nationwide network of basic disease and sanitation treatments, basic primary and secondary education and basic civil works. Instead the Tatas took, naturally for them, the upper class elitist Parsi view to social and national service.
Let’s look at their business. Tata Group is 3rd or 4th in terms of size, but Reliance and Infosys and Wipro have all done 100X for their equity investors (Indians!). If we link this with poverty removal and quality of life, then these companies are head and shoulders above the Tatas. In terms of pure business Tatas have stuck to their knitting – steel, motors, chemicals and now TCS – and have not really innovated. Ratan Tata recently revealed the bribery scandal around their airline in the 90s. The question I ask again, is, do the poor of India really need an airline? Why has the Tatas not taken a lead in building out metros, regional rail, off-grid roads etc? What is even more laughable is Ratan Tata totally misread the Indian market for Nano which is a total disaster. Indica is perhaps the one indigenous success of Tata but now that has been dwarfed (if not decimated) by the Nano blunder.
One can only hope that the new man, Cyrus, will refocus the group to businesses of the 21st century, implement real social and political changes in India, and thereby regain preeminence for the Tata Group.
Hello Sir. You write like my erudite and entertaining fellow columnist, Aakar Patel. At least the line, “Let’s look at their business,” sounds like him :)
You make very good points. I guess the easy answer is to say, why not do all types of social service, both science research and poverty alleviation.
I’m having mixed feelings about writing a criticism of Ratan Tata. But I am tired of seeing the standard common pieces of servile and waxing praise, and would like to offer an alternative view point.
For starters Ratan had no intentions of returning to India in the first place. He had taken a job in the US and planned to stay there. He returned to his ailing grandmother Navajbai and not to serve the country. The house of Tata is based on Zoroastrian virtues (Hukta, Humta, Huvasta), an agiary, rather than a business house. Even their service activites have the hint of elitism. Tata social science institute, cancer institute, Dorab Tata for advanced foreign education – these are rich men’s problems. Apparently Jamsetji’s idea was that Indians would need to govern themselves and would end up suffering from depression and cancer. I am not thrashing the old man needlessly, but surely it was plain that there was no real dearth of governing talent. After all the British trained, now indigenous, civil service corps, highly educated Indians, were more than capable of governing farmers and laborers. No, the real problems facing India in the 60s and 70s were food shortage, education, poor-man diseases (cholera, malaria, tuberculosis etc) and a visionary statesman would have done well to establish a nationwide network of basic disease and sanitation treatments, basic primary and secondary education and basic civil works. Instead the Tatas took, naturally for them, the upper class elitist Parsi view to social and national service.
Let’s look at their business. Tata Group is 3rd or 4th in terms of size, but Reliance and Infosys and Wipro have all done 100X for their equity investors (Indians!). If we link this with poverty removal and quality of life, then these companies are head and shoulders above the Tatas. In terms of pure business Tatas have stuck to their knitting – steel, motors, chemicals and now TCS – and have not really innovated. Ratan Tata recently revealed the bribery scandal around their airline in the 90s. The question I ask again, is, do the poor of India really need an airline? Why has the Tatas not taken a lead in building out metros, regional rail, off-grid roads etc? What is even more laughable is Ratan Tata totally misread the Indian market for Nano which is a total disaster. Indica is perhaps the one indigenous success of Tata but now that has been dwarfed (if not decimated) by the Nano blunder.
One can only hope that the new man, Cyrus, will refocus the group to businesses of the 21st century, implement real social and political changes in India, and thereby regain preeminence for the Tata Group.
Hello Sir. You write like my erudite and entertaining fellow columnist, Aakar Patel. At least the line, “Let’s look at their business,” sounds like him :)
You make very good points. I guess the easy answer is to say, why not do all types of social service, both science research and poverty alleviation.