Remembering Ratan Tata’s global ambitions

Ratan Tata, a philanthropist and former chairman of the Tata Group who has died at the age of 86, was instrumental in globalizing and modernizing one of India’s oldest companies.

His ability to take bold and daring business risks has kept the salt conglomerate founded by his ancestors 155 years ago relevant even after India’s economic liberalization in the 1990s. acquisition strategy.

At the turn of the millennium, Tata made the largest cross-border acquisition in Indian corporate history, acquiring Tetley Tea, the world’s second-largest tea bag producer. The iconic British brand was three times the size of the smaller Tata group company it acquired.

In the years that followed, his ambitions grew even bigger, as his group swallowed up British industrial giants such as steelmaker Corus and luxury carmaker Jaguar Land Rover.

Acquisitions have not always been successful, but Corus was acquired at a very high valuation just before the global financial crisis in 2007, and for years had been a drag on Tata Steel’s performance. It was movement.

They also had a huge symbolic effect, said Mircea Ryanu, historian and author of Tata: The Global Company That Built Indian Capitalism. He added that they “represent an ‘imperial response’ to companies from former colonies taking over valuable assets of the motherland, and that a century ago British businessmen cynically called out the Tata Group. “I’ve reversed my previous attitude,” he added.

Economist Andrea Goldstein, who in 2008 published a study on the internationalization of Indian companies with a particular focus on Tata, said the Tata group’s outlook was “outward-looking” from the beginning.

As early as the 1950s, Tata companies were doing business with foreign partners.

But Ratan Tata was keen to “internationalize in big strides, not superficial incremental steps,” Goldstein noted.

Rianu says his unconventional architectural education and exposure to the family group’s businesses may have influenced his thinking about expansion. But it was the “structural transformation of the group” he orchestrated that enabled him to implement his vision for global expansion.

Tata had to fight an unusual corporate battle at the group’s headquarters, Bombay House, when he became chairman of Tata Sons in 1991, an appointment that coincided with India’s decision to open up its economy.

By pointing the way to a series of ‘satraps’ (Persian for imperial governor) at Tata Steel, Tata Motors and the Taj Group of Hotels, he is shifting away from an increasingly decentralized domestic focus. Began to centralize operations. They operated with little corporate oversight from the government. Holding company.

In doing so, he not only surrounded himself with people who would help him realize his global vision, but also ensured that the Tata Group, hitherto shielded from foreign competition, became worthless as India opened up. I was able to prevent this from happening.

At both the Tata Sons holding company and its individual groups, he has appointed expatriates, non-resident Indians and executives with connections and networks around the world to his management team.

We also established the Group Corporate Center (GCC) to provide strategic direction to our group companies. Researchers at the Indian Institute of Management in Bangalore say they will “provide advisory support on M&A (mergers and acquisitions), help group companies mobilize capital, and assess whether target companies align with Tata’s values.” ”, they wrote in a 2016 paper.

GCC also helped Tata Motors finance high-profile acquisitions such as Jaguar Land Rover, and dramatically changed the global perception of Tata Motors, which was essentially a tractor maker.

“JLR’s acquisition was widely seen as ‘revenge’ against Ford, which had derisively refused to take over Tata Motors in the early 1990s and was then soundly beaten back by Tata Motors. “Taken together, these acquisitions suggest that Indian companies have ‘arrived’ on the world stage just as growth rates are picking up and liberalization reforms are bearing fruit.” say.

Currently, the $128 billion group has operations in 100 countries and derives a significant portion of its total revenue from outside India.

Although the Tata group made great strides overseas in the early 2000s, the failure of the Tata Nano, which was launched and sold as the world’s cheapest car in the country, was a setback for Tata.

This was his most ambitious project, but this time he clearly misread the Indian consumer market.

Brand experts say ambitious Indians didn’t want to associate with cheap car tags. And Tata himself eventually acknowledged that the “poor man’s car” label was a “stigma” that should be rescinded.

Although he believed his product could be revived, the Tata Nano was eventually discontinued as sales plummeted year-on-year.

The issue of succession in the Tata Group also became a thorny issue.

Experts say that after leaving office in 2012, Tata became too involved in the conglomerate’s management through the “back door” of Tata Trusts, which owns two-thirds of the holding company Tata Sons. It is said that he continued.

“I’m not putting the blame on Ratan Tata, but his involvement in the succession battle with (Cyrus) Mistry has definitely tarnished the group’s image,” Rainu said.

Mistry, who died in a car accident in 2022, was ousted as Tata chairman in 2016 following a board coup that sparked a lengthy legal battle that the Tatas ultimately won.

Despite many misdirections, Tata retired in 2012, leaving the vast empire he inherited in a stronger position both domestically and globally.

In addition to major acquisitions, his efforts to modernize the group with a focus on IT have served the group well over the years.

When many of the big bets failed, one high-performing company, Tata Consultancy Services (TCS), along with JLR, was carrying “the weight of the deaths of other ailing companies”, says Ryanu.

TCS is now India’s largest IT services company and the Tata Group’s cash cow, accounting for three-quarters of its revenue.

In 2022, the Tata Group brought back Air India, India’s flagship airline, under its control for the first time in 69 years since the government took control of the airline. For Ratan Tata, himself a trained pilot, it was a dream come true, but also a bold gamble given how capital-intensive running an airline is.

But Tatas appears to be in a stronger position than ever to make big, bold bets on everything from airlines to semiconductor manufacturing.

Prime Minister Narendra Modi’s India appears to be clearly adopting an industrial policy that creates “national champions” who create and promote a small number of large conglomerates to achieve rapid economic results across priority sectors. .

It is clear that the deck is stacked in favor of the Tata group to benefit from this, along with emerging industrial groups like Adani.