The Taj Mahal Hotel was founded, according to legend, after Jamsetji Tata was refused entrance into a European-owned hotel which displayed a sign forbidding entry to dogs and Indians. He vowed to build a luxury hotel that would be open to Indians and where Indians could entertain and be entertained without being insulted. There is, however, considerable doubt as to whether the story is true.

That sign did exist, says the Taj Mahal’s deputy general manager, Birgit Zorniger, but that is almost certainly not why Jamsetji Tata chose to build the hotel.

The real reasons lie again in his commitment to developing the Indian economy.

Mumbai’s hotels were few and poor, a source of discontent to visitors and locals alike.

The American writer Mark Twain complained that the cook at his hotel knew only one dish, Irish stew, which he served on fourteen consecutive occasions, each time with a different French name on the menu to disguise what was coming.

Even some of the best hotels were full of rats, which was particularly unpleasant given that there were periodic outbreaks of bubonic plague in the city.

Tata wanted to attract European and American capital and technical experts to the city, but he knew he had little chance of doing so unless visitors had access to a hotel that was both clean and safe.

In fact, there were no luxury hotels in India, and very few in Asia.

The Eastern & Oriental Hotel in Penang and the Strand in Rangoon, both owned by the Sarkies brothers, were about the only ones.

Raffles Hotel in Singapore, also owned by the Sarkies, had at this point just ten rooms – and it did not admit Asians, except as staff.

Jamsetji Tata’s idea of a large luxury hotel – the initial plan called for accommodation for 500 guests – where Europeans and Asians could meet on terms of equality and discuss business was radical in both economic and social terms.

The land was purchased in 1898, and work on the site began in 1900.

As he commonly did, Tata laid down his initial requirements and then let his trusted experts get on with the job of designing and building the hotel, although it is said that he visited the site most days to observe the progress.

His main requirement was that everything should be of the same quality that he had observed at first hand in European and American luxury hotels: the rooms, the furnishings, the restaurants, the shops, the laundry facilities.

An electricity generator was installed to provide lighting, and in those days before air conditioning he specified that rooms should be designed to allow air circulation.

The hotel opened on 16 December 1903.

Tata had financed the project, which cost the then colossal sum of Rs 25 lakh, out of his own pocket.

This was not a Tata & Sons project, and he had no intention that it should be part of the group; this, as (Tata historian) RM Lala says, was to be his gift to his city.

He attempted to find an experienced hotelier to take over and run the operation, but had not been able to find one before he died in May 1904.

Responsibility for running the hotel passed by default to Dorab Tata and his partners at Tata & Sons.

For all the affection and pride with which Mumbaikars regarded the hotel, it remained something of a cuckoo in the Tata nest for many years, quite different in every way from the other companies in the group. It was not seen as being a core Tata business.

Eventually the group did realize that in the Taj it had both an important physical asset and the potential for a very important brand, and today the Taj brand is one of the strongest in the Tata group. But this process did not come about by design.

RM Lala, as both a historian and long-time director of the Sir Dorabji Tata Trust, one of the organizations that owns Tata Sons, knows more about the history of the Tata group than anyone living.

When I met him in Mumbai in 2009, I asked what he thought was the secret of Tata’s success.

He paused and then said, ‘Well, there is luck, of course.’

There is, and the Taj is an example of that.

The fact that one of the jewels in the Tata crown was nearly disposed of at its inception, then neglected, is curious.

Did Jamsetji Tata’s sons and their immediate successors think that a luxury hotel did not fit well with the ideals of Svadeshi and nation-building in the era of Mahatma Gandhi?

Did they hold on to the hotel out of respect for the Founder (plus of course its obvious profitability)?

We shall never know.

Fortunately for both parties, they held on to it and today that jewel shines very brightly indeed.

Excerpted from Tata: The Evolution of a Corporate Brand by Morgen Witzel with permission from Penguin Books India: