The shy architect: Ratan Tata

Ratan Tata has transformed India’s biggest company, and done it alone

CASTING about for someone to run a big family firm when a successful tyrant is due to retire is usually a troublesome business. When the firm is still controlled by the same family that founded it back when John D. Rockefeller was gobbling up refineries in Cleveland, it becomes still more daunting. Add the fact that the ruling family are Parsees, a small Zoroastrian sect who have been intermarrying in India for over a thousand years, and the odds of finding someone who is up to the job lengthen again.

Yet after indifferent early reviews, Ratan Tata has transformed the Tata group, of which he is chairman. When he took over from his uncle, J.R.D. Tata, it was a cumbersome conglomerate with stakes in a huge collection of companies that seemed likely to wither in the face of foreign competition. Now it makes foreign acquisitions and ventures into unfamiliar markets. Tata Steel’s bidding war with CSN, a Brazilian firm, over Corus, an Anglo-Dutch steelmaker, is just one example of the once-staid group’s new boldness. Mr Tata was recently voted Indian of the year by viewers of an Indian television channel, beating both Sachin Tendulkar, India’s greatest cricketer, and Aishwarya Rai, the country’s most famous screen goddess. And he has succeeded partly because he is what his friends call an individualist, and others might call a loner.

Mr Tata does not like publicity and avoids the platforms and applause of conferences. He lives frugally, does not drink or smoke and seems baffled by the idea of time spent not working. Asked what he would do with it, he usually replies that he would walk his dog along the beach near Mumbai. He does not seem to be motivated by money, and talks constantly about fairness and doing the right thing. “I want to be able to go to bed at night and say that I haven’t hurt anybody,” Mr Tata says twice in the course of an interview at a hotel in New Delhi owned by the sprawling group.

Mr Tata became chairman in 1991, just as India’s economy was opening up. His uncle, who had run Tata for more than 50 years, had started Tata Airlines (which became Air India) and was to India what Gianni Agnelli of Fiat was to Italy. He was a good-looking philanthropist with a French wife and held the first pilot’s licence to be issued in India. His shy and unglamorous nephew, in contrast, trained as an architect at Cornell University, slipped quietly into the family firm and was not marked out for the succession even when his uncle was due to bow out.

Despite all the glory that surrounded J.R.D., when he retired in 1991, Tata was a group of companies ill-equipped to deal with the changes about to sweep through India. It earned most of its money in old-fashioned industries that had grown fat during the centrally planned “licence raj”, when the government set limits on how much firms were allowed to produce and protected them from foreign competitors. The stakes held by the family in many of the 300-odd companies in the group were tiny, and the main Tata businesses were run as independent fiefs by men much older than Mr Tata.

They might have expected Mr Tata, who had never held an executive position, to leave them alone. Instead, he retired them, improving their pensions to soften the blow. He sold stakes in some companies and used cash from the sales and revenue from Tata Consultancy Services, India’s largest IT firm, to shore up control of those that remained. There are now a mere 96 companies in the group, and Tata Sons now owns at least 26% of each of them. That has made the portfolio a little easier to manage, but it leaves Mr Tata more isolated at the top.

Shortly after he became group chairman, Mr Tata also decided that Tata Motors would make its own cars, even though a joint venture with a foreign firm would have been easier. Critics grumbled that a good truck business was about to be destroyed for the sake of an ill-conceived vanity project. But after a difficult start, Tata Motors is now India’s second-biggest carmaker by sales. “If he had listened to what everyone told him, he would never have done it,” notes one of Mr Tata’s friends.
First, do no harm

Although he has made Tata’s big businesses more competitive and more inclined to look beyond India’s borders—Corus would be just the latest in a series of foreign acquisitions—Mr Tata has also run it in keeping with Tata’s public-spirited tradition. Two-thirds of Tata Sons is owned by charitable trusts that do good works in India, and the firm is known for refusing to pay bribes and for treating workers well. (The children of Tata’s steelworkers were given free education back in 1917.) Foreign investors sometimes wonder if this is good for business. “At first I didn’t have an answer,” Mr Tata says. “But then I asked myself: am I competitive? Yes. And this is the way companies are moving.”

Mr Tata’s latest car project—producing a vehicle that will sell for under $3,000—combines two of the things that keep him from those walks along the beach: securing the fortunes of the family group and pleasing a highly developed sense of fairness. The factory will be in communist-run West Bengal, a state chosen partly because it is in need of industrial development. West Bengal’s government is eager for the investment, but Tata Motors has faced protesting farmers, a politician on hunger strike and, Mr Tata thinks, commercial rivals trying to prevent the birth of a more affordable car. Tata Motors is sticking it out, and expects to secure the land to build its new plant at the end of the month.

Mr Tata, who has no children, is due to retire in December 2012, when he reaches 75. That will leave the group with a familiar succession problem. Meanwhile, he is heading the government’s investment commission, which works to increase foreign investment. And he may be about to create one of the largest steelmakers in the world. Not bad for a shy architect.

Economist Jan 11th 2007

  • Puneet Rajhans

    My best wishes for Ratan Tata who believes strongly about the underprivileged of the country. The best reasoning for the companies in his empire to grow has been a large number of them are linked to charitable institutions and a major part of their profits go towards charitable activities.
    Those who think and do for the poor always move ahead. God would shower him with more strength in undertaking such noble acts in future as well.

    With best wishes

    Puneet Rajhans
    New Delhi.

  • Mehraab Patalwala

    am really happy and glad to read all about, Sir Ratan Tata… well its just great me being an indian parsi, its pride for me to have some one like the tatas born in our community, and the country,, well its as if only tatas is only interseted in running the country, and it has been doing it since last 150 years successfully, and will be doing it for another years to come. the only hear breaking fact it the government is not being as supportive as it should be, and one last thing out of a million people in india, are parsees only trying to run india, or is only tata developing the country,, where are the rest of the country men,, i think i knw they are busssy collecting loads of money…..
    i dont have any right to comment, well am just 20 and pursuing my mechanical engg. still am not blind..
    there is only on person who motivates more than anyone on this earth,, and that is SIR RATAN TATA himself,, his life is full of motivations. keep it up best wishes with you fore ever and ever,,

  • Jewel

    I too am impressed with Mr Ratan Tata. A man with keen vision and good business sense that is leading both india and the rest of the world forward through innovation. Wish he would do more for his people though. No use supporting a few charities, get out there and help. Time to lead by example Mr Tata

  • yuki arora

    To introduce myself, Yuki, a distant admirer of yours for your simplicity, ethics, business acumen, your vision and passion for this country and its people. Your concern for humanity makes me to write this mail from New Delhi as I follow the same ethics, passion and concern. Your emphasis on the benefits of safer transport for many families that currently move around on single motorbikes has turned into vision and now in reality to make them available a car at affordable price. Not only as an ardent admirer but also as an Indian I feel proud to know your indispensable contribution for bringing India on the global map and your unflinching commitment to make the world a better place and your stress on the legacy to take along. Your devotion to work is reflected in every move you make. As ordinary human beings, we always look upto you and wish you success in any endeavour you undertake.

  • Bharati Barge

    In today’s selfish world where people sell their ethics for money or publicity, Sir Rata Tata is a very great person. A truly down to earth person with so much simplicity and care for humanity which is rare one in today’s starving world. Person like Sir Ratan Tata born once in the million years. He is a true idol. One could learn lot of things just by looking at hime. His body language and way of communication reflects his great values and ethics. I salute to these great gift of God to India. And pray to God I could meet atleast once to Sir Ratan Tata before I die.
    Dear Sir Ratan Tata :- A man of values and ethics I wish you a very long healthy and happy life. May God fulfill all your wishes and dreams.

  • Sharib Zameer

    I am just thinking that where India would have been standing now if the so called leaders and politicians were or start thinking about our country’s and people’e prosperity the way Sir Ratan Tata does.

  • The_Voice

    I admire this great person. The virtue of being a good humanitarian is in not causing any harm to fellow beings. Thanks to Human mind, ideally this is next to impossible. Anything or any act close to it is appreciated and respected.
    He has rendered his service to the nation as a honest industrialist to contribute to put our country on world map. But owning such a fame and admiration, there is still a lot to be one. The country can only flourish if we can inject these values in the mainstream. this is possible when every son of this soil gets his share of roti, kapada and makaan. Every revolution needs a leader, and if ppl like Ratan-ji Tata cannot vision it then all his contribution is just worth a mention. Certainly this does not mean that in any ways my respect for him and his service will ever diminish.
    Ratan-ji you cannot call Nano as your dream project. If you will not do it, then some one else will do it for business sake. For a person of your caliber, set bigger goals.. ppl still do not require nano.. its more ppl require your service for essentials of living…

  • ARUN


  • jagadeesh

    Type your comment here…i impressed with mr ratan tata ,, you changed the meaning of trust .TATA means trust.