The family business that helped build Indian industry

Starting over a century ago and against considerable odds, the Tatas virtually single-handedly built Indian industry.

Theirs was the country’s first Indian-owned textile mill, India’s national airline and its first integrated steel plant.

Ratan Tata: Chairman Tata and Sons

Today, Tata Group bestrides the Indian corporate scene with billion dollar divisions in software services, cars, hotels and, of course, steel.

With revenues of $21bn last year and profits of more than $2bn it is at the forefront of an aggressive buying spree by corporate India.

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In the last six years Tata Group has spent more than $5bn buying a score of companies across the globe, taking on competitors and beating them by transforming its operations at home and plugging it into the world economy.

Buying Corus would be the biggest takeover of a foreign company by an Indian corporate.

The British connection has been growing too. The company spent £270m for Tetley Tea in 2000. Last year, Tata announced plans to set up a hi-tech automotive laboratory in Birmingham, eventually employing a thousand people in Birmingham.

Tata Consultancy Services, India’s largest IT-services unit, which employs 2,000 people in the UK, is currently setting up shop in Peterborough after buying insurance company Pearl’s call centre for $50m.

Although not a traditional family business, Tata Group retains the noblesse oblige atmosphere of the traditionally wealthy.

Running the show is Ratan Tata, a 68-year-old softly spoken Cornell educated architect who reawakened India’s sleeping giant when he took over in 1991 from his 86-year-old uncle, Jamshed Ratan Tata.

The sprawling conglomerate was then in a mess. Executives ruled the operating companies, seeing the group as a distant power. The atmosphere in the boardroom was that of an English club, full of old men who fell asleep in soft comfy chairs.

Within five years Ratan Tata had reinvented the company. Carefully ousting troublesome managers and reasserting control he sought to refocus Tata.

He spotted that the cash flow from the booming software unit – Tata Consultancy Services – could rebuild the group and did so with large scale investments.

However, while Tata had been spending abroad, the company has faced new competition at home. Tata Steel, one of the company’s star performers, saw itself overshadowed by upstarts such as Posco of South Korea, which has plans to build a 12m tonne steel plant in India.

Similarly Mittal’s merger with Arcelor to create a company producing a 10th of the world’s steel, caused Tata Group to rethink its strategy.

A purchase of Corus, would put Tata into the top 10 of steelmakers. If this deal comes off it will be a coup for Mr Tata. With little more than a year to retirement the race to succeed him is already on.

The favourite for the job is Noel Tata, Mr Ratan Tata’s half brother. He also happens to be the son-in-law of Tata Group’s largest shareholder, the billionaire construction tycoon Pallonji Mistry.

Like most big family businesses Tata Group has a complex shareholding structure.

Tata Sons is the holding company of the conglomerate. Mr Mistry, who like the Tatas comes from a tiny religious minority called the Parsis, owns almost a fifth of Tata Sons. In rare public appearances he defers to Ratan Tata, whose personal shareholding is less than one percent.

In a sign of perhaps growing influence, Mr Mistry’s younger son Cyrus joined the Tata Sons board in last month.

Randeep Ramesh in New Delhi Thursday October 5, 2006 The Guardian

  • angel

    Family Business as helped a lot in the development of Industrialization. TATA Group is also the one playing a big role in the whole process.