The indispensable Mr Tata
Group cannot seem to say goodbye, turns to former head during a period of transition
NEW DELHI: Ratan Tata took charge of the Tata Group, India’s largest business conglomerate, in 1991, when its various parts were controlled by the so-called satraps: powerful CEOS who ran their companies like a fief. Tata made them fall in line and made the group cohesive, modern, and agile.
No wonder the group turns to him at a time of transition that arises now that it has decided to replace Cyrus Mistry as chairman. That and the fact that Ratan heads Tata Trusts, which together control the largest chunk of equity in Tata Sons, though Mistry’s father, Pallonji, remains the single-largest individual shareholder.
Ratan joined the group in 1962 as an apprentice at the company’s steel plant in Jamshedpur. After toiling for nine years, he was asked to take over operations of the National Radio and Electronics (Nelco) — makers of radios, radiograms and some other engineering products. Nelco was in a bad shape, running up a 40% loss. Ratan was on the verge of turning it around when the group shut it down, and he left for higher studies abroad.
Ratan joined the group again in 1977, to revive its ailing Express Mills, which was in the grip of unruly workers’ unions. That was when unions, led by Datta Samant, were holding mill owners to ransom. As other mills shut down, Express Mills remained afloat for the next nine years.
In 1991, JRD Tata named Ratan his successor. In many ways, Ratan’s rise ran parallel to the rise of the Indian economy. As the economy grew, became more open, and embraced foreign companies, the Tata Group also grew, entered new businesses such as software, and led the march of Indian companies to acquire foreign entities.
After his retirement, Ratan turned into a venture capitalist — he has invested in close to 30 start-ups, mentors them, and helps them evolve.
To find a replacement for Mistry may be Ratan’s trickiest challenge yet, since it will be akin to finding a replacement for himself a second time. Ratan headed the search panel that had decided to make Mistry the boss. Now he heads the panel that searches for Mistry’s replacement.