Ratan Tata: ‘We don’t have the urge to be No 1’

The Tatas are arguably India’s most respected corporate house and the Tata brand always heads the list of top Indian brands. The man who took this brand and built the entire Group around it was Ratan Tata, 81, who till recently led the Tatas as its Chairman and still heads Tata Sons, the holding company, and the two main charitable trusts. He has received countless awards from all over the world for his leadership in business and philanthropy and the Padma Vibhushan. He speaks to me in his office in Fort, Mumbai, from where he leads his post-retirement initiatives.

Ensconced between two of South Bombay’s historic landmarks, Flora Fountain and Kala Ghoda, lies a thin, busy street called Homi Modi Street where you will find Bombay House. Bombay House is a charming three storied neo-Edwardian structure constructed in 1924 by the Scottish architect George Wittet who also created the Gateway of India and the Prince of Wales Museum, and 44 other buildings, among them (I am told) the house where I live. Bombay House has been from its very start in 1924, headquarters of the Tata Group, India’s largest industrial house, with revenues of Rs 673,347 crore and assets of Rs 845,212 crore. The Group accounts for 6.5 per cent of the total market capitalisation of Bombay Stock Exchange. What it also has is an immaculate reputation as a group with high ethics. Its profile and its size, including its profits, something the Group rarely speaks of, transformed during the time Ratan Tata occupied the corner office. It was 1991 when JRD Tata (fondly called Jeh) handed over the baton to him amidst much controversy and some rancour. In 2012, Ratan retired as head of a $100 billion conglomerate, having successfully consolidated what he describes as “a commonwealth of independent companies”.

Ratan now works out of another heritage building, this one of Venetian-Gothic architecture, barely an 8-minute walk away. Elphinstone Building was designed by Reinzi Walton in the late 19th century and is as historic as Bombay House. He sits in an austere corner office on the third floor dominated by a red Laxman Shrestha. (Shrestha is one of his favourite painters whom he persuaded to work with the colour red in his abstracts and legend has it that the few works he ever did in red were invariably picked up by Ratan.)

I sit on a sofa facing him. It’s ten past 3 in the afternoon and the nagging September rains have dimmed the natural light. Ratan talks softly: “I am sorry you had to wait.”

Ratan is in his early eighties. But it’s tough to tell. He’s busy, as busy as any full time CEO. He travels non-stop and often flies the aircraft himself. His distractions are few, very few. He reads little, listens to some occasional music, either the 70s stuff like The Beatles or Tchaikovsky and is unhappy that he is not adept enough on the piano to play what he enjoys listening to. He watches movies but not in theatres. He has watched The House of Cards on TV but finds it difficult to sustain continuity. The world is still his playground. What he enjoys most is what he has done all his life: business and travel. He believes the Group has many worlds left to conquer.

He received the Padma Bhushan in 2000 and the Padma Vibhushan in 2008, when he was leading the Tatas to their pre-eminent position across multiple businesses. Steel, auto, power, IT, chemicals, airlines, hotels, aerospace and defence, hospitals, tea, coffee, retail, even air conditioning, watches and jewellery, you name it. Tata has a presence there.

His background is also South Bombay. He schooled at Cathedral and John Connon and then, in Simla, at Bishop Cotton. In 1962, he picked up an architecture degree from Cornell and in 1975 did an Advanced Management Program at Harvard. Ratan is the son of Naval Tata who almost succeeded JRD but didn’t (Young Ratan did). Naval was the adopted son of Sir Ratanji Tata whose wife brought him home from the JN Petit Parsi Orphanage.

When Ratan was barely ten, his parents divorced. He and his younger brother Jimmy were raised by their grandmother, the same lady who had adopted his father. He has a half-brother, Noel, from Naval Tata’s second marriage to Simone. As Ratan says in his interview, he was quite happy to stay away from home during his young years. Going abroad was almost like a relief.

He began his career with the Tatas in the 60s, on the shop floor. He struggled his way up, moving from assignment to assignment, till he caught JRD’s eye. JRD took him under his wings, became his mentor. In 1991, after a bitter power struggle, he succeeded JRD who had retired after 42 years. There were many who wanted the job. Nani Palkhivala, distinguished lawyer and former Indian ambassador to the US, Russi Mody, head of Tata Steel or TISCO as it was known then, Sumant Moolgaokar, the boss of TELCO, Darbari Seth of Tata Chemicals, Freddie Mehta and Naval Tata, number two in the Tata hierarchy. JRD chose young Ratan. Today, more than a quarter century later, it looks like a fine choice. But at that time, it raised a storm.

The Tatas grew under Ratan’s leadership. They went overseas and acquired new, prestigious companies. Tata Tea took over Tetley. Tata Steel acquired Corus. Tata Motors bought Jaguar Land Rover (Just in case you hadn’t noticed, James Bond chauffeured M in a Jaguar XJ in Skyfall and drove the Range Rover Sport through Bolivia in Quantum of Solace). The Group joined Singapore Airlines to start Vistara, a full-service airline now all set to go international, and invested in AirAsia India, a budget airline as well. The Group’s revenue is $104 billion and growing. Brand Tata is a global benchmark. When Ratan relinquished charge at 75, revenues had grown 40 times; profit, 50. His successor was Cyrus Mistry, 44, son of Ireland-based Pallonji Mistry, one of the Group’s largest shareholders. Handpicked, some say, by Ratan himself.

In October 2016, Mistry was suddenly (and inexplicably) chucked out. So were the people he had chosen to work with him. And Ratan came back as interim Chairman for four months to lead a selection committee to find a successor. He did. In February 2017 he stepped down again when Natarajan Chandrasekaran, the TCS chief, was named Chairman of the Tata Group.

If anyone is asked today to name one Indian industrialist who best represents the spirit of Indian enterprise, the answer is most likely to be Ratan Tata. Let’s find out why.

You studied architecture in Cornell. Then you shovelled limestone in Tata Steel for a while, after which you joined NELCO and did not have a very successful time there. It is only when you succeeded JRD in 1991 that you had this splendid success story of consolidating and improving upon what was then a tiring empire. What changed things for you?

Let me correct you, NELCO was not an unsuccessful stint. It was very successful in terms of wiping out losses and making it a dividend paying company again. What went wrong was that the Tatas never adequately capitalised the company. So while it became positive, it could not scale up and grow. You may recall that we were in radios when I joined the company. We had only 2 per cent market share. I took that to 20 per cent. We were second to Philips and just under Murphy, that was the big radio company at that time. And given the capital that we never got… because we were made a part of Tata Power which didn’t have any real interest in consumer products, we went into industrial electronics. But for me personally it was a tremendous learning period because it was a company under terrible financial stress. It had losses equal to its capital when we took it over and we were literally pulling out every drop of water from the bucket. We never knew if we would be able to meet our payroll requirements at the end of every month. Those 8 or 10 years in NELCO was what I drew upon in later years. Yes, the general misconception was that NELCO was a failure but that failure was, if I can say so, the Tata Group’s failure. They did not see the importance of electronics or the need to take it further. They just wanted to get out of radios.

Why was the Tata Group so keen to only stick to its traditional businesses and not look at emerging opportunities?

There were a whole host of peripheral companies in the Tatas and there may still be some. The older directors like Nani Palkhivala and others like him felt that we shouldn’t bother with textiles, we shouldn’t bother with NELCO and other smaller companies and should focus entirely on the major companies like Tata Steel, TELCO, Tata Chemicals. In the case of NELCO, I must say, with a certain degree of pride, that had it not been for Jeh, the company would have been liquidated. He saw the future in electronics. He saw the future in air travel. He saw the future in computers, IT. Many of his colleagues did not. A good example is watches. If it was not for Jeh, we would have not had a viable company like Titan. We certainly would not have been in the jewellery business. It was only Jeh who took it ahead. Everybody else said this is not a business we should enter. I was on the board of Tata Sons at the time. I could see the way it played out.

“We have suffered from being dominant in the marketplace in many of our businesses,” says Ratan Tata

Share this on

When you succeeded Jeh and got to lead the Tata Group, what did you see as its inherent strengths at the time?

One, there was tremendous adherence to ethics and value systems. If not, we would have drifted apart in different directions. There was also a great sense of pride in what we were. Russi Mody was very proud of what Tata Steel had done. Darbari was very proud of Tata Chemicals and Tata Tea. But, unfortunately, there was no marshalling of all that into the Tata Group. That was one of the problems.

One of the problems you addressed?

Yes, I tried to do that through bringing in one logo, one brand identity.

Much to the discomfiture of some of your colleagues?

Well, there was discomfort in the sense that for some of these things they had to refer to Tata Sons and for so many years they had been their own bosses. So there was some resentment there. Jeh stood with me in making this transition, though it took place after Jeh.

This idea of building the Tata brand was your first move on assuming power?

Yes.

How was that inspired? Why did the brand become your first priority? Not people. Not products. Not new businesses.

I was a young man in Tata Steel having come up, as you mentioned, from the shop floor. Looking at the situation where Tata Steel did not speak to Tata Engineering and Tata Engineering did not speak to Tata Chemicals, it seemed such a waste. If Tata Tea wanted to buy something that Tata Engineering could have sold them, they would instead look at someone outside. After all, it was their decision and how could I interfere in that? In the market we were missing out so much in terms of opportunities because we were not one. Everybody was busy taking their own decisions. When the integration finally happened, most of the companies fell in line and began introducing themselves as part of the Tata Group. They started talking about combined revenues, size, common interests.

Did they start taking commercial advantage in the marketplace of the Group’s enhanced size and stature?

Yes, I believe so.

Did it help the smaller companies?

Yes, but it also helped the bigger companies. TELCO, which considered itself having revenues of say X, now began to see itself as part of a Group with revenues of 3X. They began to take advantage of that upscale in size. Also, the companies were no longer seen as single companies but as part of a big, strong group. Mind you, the Group had no legal standing. We did not have combined legal accounts. We did not have combined audited figures. We had audited figures only for each of the companies.

But that move elevated us from just being a commonwealth of independent companies into a Group that was looked upon as one company.

Which were the companies that you felt had a serious future? In which companies did you invest most of your time and energies?

I spent most of my time in TELCO that became Tata Motors.

Well, I guess, that reflected your passion for the Nano, the people’s car as you called it?

The Nano came later. I think we have all forgotten that the first Indian car that was designed in India and produced in India was the Indica. That was our entry into the passenger car area. Everyone said it couldn’t be done without collaboration. But we did it. Nano came in later as our effort to make the most affordable family car. And we made several mistakes in marketing it when it was ready.

What do you think happened? Why did Nano not become the success it was intended to be? What failed it?

When we announced the Nano at the Auto Expo in Delhi, we got more attention worldwide than the group had ever received in the hundred years we had been around. When we arrived in New York and showed our passports to immigration, they would ask if we had anything to do with the Nano. It was so much in the news in those days! When we launched the car in Delhi, on the day of the launch we received 300,000 orders for the car with full payment. That was the level of excitement in what was then described as a Rs 1 lakh car. Our competitors had said it couldn’t be done at that price. And we had done it. It was there to be seen, touched, driven.

It wasn’t actually a Rs 1 lakh car by then? It was perhaps closer to Rs 2 lakh on the road.

No, no. When you added the taxes, it went up to Rs 1.25 lakh or Rs 1.30 lakh. But you are right, the price of steel later went up and so did other things. So its price kept increasing. It didn’t stay that way. I don’t know whether it was motivated by our competitors or just happened on its own, but Mamata Banerjee then arrived on the scene and stopped us from producing the car in West Bengal because it was a development initiated by the CPM. She actually won the election on the basis of giving that land back to the farmers. We then had to move to Gujarat. It took a year and we became complacent during that year because we already had 300,000 orders, full payment received. We thought that as soon as we turned the switch on, everything would reactivate. But the fire was gone. The excitement was gone. Our sales people made the greatest mistake by marketing it as the cheapest car. The aura around the Nano became a stigma. People said: I don’t want to be seen in the cheapest car. I don’t want the cheapest car parked in my driveway. People will think I cannot afford anything more. I think that one mistake destroyed the entire image of the car. After that, it was downhill all the way. It never truly recovered.

“Our sales people made the greatest mistake by marketing it as the cheapest car. The aura around the Nano became a stigma. People said: I don’t want to be seen in the cheapest car,” says Ratan Tata

Share this on

What do you see as the businesses of the future, businesses in which the Tatas should be investing from now?

That’s a difficult question to answer. If you look at our major businesses, steel will never disappear. It will always be a foundation industry. In different periods of times, it will be linked to economic growth or decline as the case may be. But steel is not going to be replaced by rubber or wood or aluminium. It will continue to be important for us if we play it right. But it is true we have lost the position we had in the 50s and 60s. We now have competition, [companies that] all have very viable steel plants. We have suffered from being dominant in the marketplace in many of our businesses. We don’t have the urge to be No 1. Those companies that had the urge to become No 1, became No 1. TCS, for example. Transportation is not going to disappear, but it’s going to be tougher with more competition.

You mean cars and the new aviation business?

No, I am talking about road transportation. Almost every car company in the world is here. We have competition. But we should not try to block imports. We should aim to do better ourselves. We were No 2. Now we are No 5. We should be asking ourselves what we should do to gain back our market position. In chemicals, we are the largest salt producer. We are looking at other agricultural products. We used to be in fertilisers. And then we come to the question: What happens to the other companies? Do we make watches? We don’t make textiles any more (it’s where we started). We are very prominent in IT services. There again, what will IT services look like ten years from now? Maybe, even five years from now when machines will start to write software that humans are writing today. The dynamics and the balance of the IT industry may change and if we are not there when the change takes place, we will be disadvantaged. Similarly, in the auto industry, changes will take place. If we are going towards driverless cars, we’d better have a solution there. If we are going towards electric cars, it will be our folly if we fall behind. We may all sell some industries because it may not be worth the management time or the investments required to be made in them. Management will have to look at all these issues. At a time like this, we may not consider ourselves to be prominent in a space like, say, telecom. It’s now a battle between Reliance and the incumbents. There is no space for a bit player.

But you are not going to sell the business? You want to shut it down.

In today’s context, we can’t sell it. But whatever we do, sell it or shut it down, it has to be done.

Why did you fail in telecom?

Originally, we joined hands with Idea. We were amusingly called Batata for a while. We grew together and put our telecom circles together to become an all-India company. We could have been 50 per cent owners of Idea. Companies may change. Titan may not remain a watch company. It could become a jewellery company. A big area that has opened up today is aerospace and defence. We are quite large there though we do not talk about it too much. Some of our companies will certainly have to adapt and change…

Do you think you missed out in being part of today’s FAANG economy dominated by Facebook, Amazon, Apple, Netflix and Google?

I don’t think we could have been there. I think it would have been very difficult to be an Indian company in those areas and we wouldn’t have had the mindset to be successful there.

“A big area that has opened up today is aerospace and defence. We are quite large there though we do not talk about it too much,” says Ratan Tata

Share this on

Your mindset limits your presence to traditional businesses alone?

Our mindset is not very different from that of other companies like General Motors, General Electric, the automobile companies, the steel companies. It’s different. It’s like asking a bank if they would become a blockchain company. It’s not going to happen. We would be very uncomfortable raising equity constantly with huge losses on our books and being the largest player in the world. But maybe some of our newer companies will hire people who have that kind of mindset.

Do you have space within your organisation to grow startups with radical new ideas?

Yes, we have the space. But do we have people to occupy that space? I don’t think so. When we hire people, we don’t look for the things such people will bring. Sergey Brin and Larry Page thought of Google right out of college. Would that happen in India? I doubt it.

What stops you from investing in such companies overseas? After all, you are a global company. You can be one of the first funders of such new ideas.

We have made a couple of investments in early startups in the Bay area. They did very well for a period of time and then they sank in six months. In the first year we had revenues of about 60 million dollars. Then things started going wrong.

Did you take hands on interest in those ventures?

In one, yes. And again it was Jeh who said, let’s do it.

You have shunned the media business all your life. Why is that? Be it traditional media or new media.

You are talking about me or the company?

Both. In fact, the Tatas gave away The Statesman, once a leading newspaper, to a trust. It’s now a shadow of its former self.

I had nothing to do with The Statesman. That was Nani. He gave it to Cushrow Irani, who was one of his relatives. When things got hot between the Government and the newspaper, Jeh issued a mandate that we would not get into media again. After Jeh it is true we have sat down and thought about the mandate on many occasions, but we could never really come to a conclusion. So we continued the mandate. Jeh always believed that ownership and editorial should be totally independent of each other in the media business. But politicians never tolerated that view. They would come and complain to Jeh all the time. And they wouldn’t believe him when he explained his position.

But media today is very different, particularly digital media. It delivers news, sports and entertainment content on platforms that can no longer be controlled by owners?

Well, we have come very close to investing in electronic media but it has not happened. But we did Tata Sky, which is also a content delivery platform, though it is no longer the biggest any more. This is the closest we have come to what you are talking about.

Let’s book beyond business for a moment. What do you read?

In the last few years, I have not read much of any serious stuff. I watch streaming content, Netflix.

Have you watched House of Cards? And shows like that? Narcos? Game of Thrones?

I have watched House of Cards, Prison Break… Much of what I watch is very sporadic. So it is difficult to keep up with serials. I travel too much. So I watch bits and pieces of many shows.

Do you watch sports?

Yes, I watch football, tennis, golf—but only on TV. And to be honest, most times I do not even know who all are playing. I just watch the game. I enjoy the skills of the people playing. If you ask me who is playing, I would have frankly no clue. I just enjoy the game.

What do you do beyond business and philanthropy?

I enjoy cars. I have started to collect cars now.

Old cars? Antiques?

No. Cars of the 60s and more recent ones. I am particularly passionate about their styling and mechanical issues. That’s why I buy them— to study them. And, oh yes, I still fly.

“The micromanagement of the economy, whether it is by the politicians or the bureaucrats, must stop. Only then will India achieve what it is truly destined for,” says Ratan Tata

Share this on

How often do you fly?

I fly the company jet. I am type rated on that. I fly helicopters. I use them to go Pune, to the Tata Motors factory. I am very passionate about the technologies of aviation. That brought Jeh and me together.

I hear you almost got married five times?

Four times.

And the one time you almost walked to the altar was when you were in the US?

That’s right.

Why didn’t you marry her?

I would have got married that time. But I had to suddenly come back to India because my grandmother called me. And around that time, the China war happened too. So I got stuck here. That person later got married, happily married and then her husband died. And then some years ago I was sitting in my Bombay House office when someone gave me a slip of paper and said that he had just come back from a conference in Paris where he had met this person and she had given it to him for me. It was from her. There is nothing special about the relationship any more though. But now we keep meeting each other. She has a family of her own, children too. It’s a small world. We had completely lost touch with each other and now we are meeting each other again, as friends this time.

Would you contemplate marriage?

No. Nor does she. We are just friends now.

It is commonly known you love animals. Particularly stray dogs who would walk around the corridors of Bombay House when you were there. You had approved their presence there. I also understand you have supported many animal causes.

Well, I saw the dogs being shooed away when they came into the building during the rains. I told the security to allow them in. Where would they go otherwise? I asked the Taj to allocate their leftovers to strays so that they can be fed. One of those dogs now walks all the way from Bombay House to come here and catches the lift with other people coming up and gets off, not on the first or second floor, but on the third and stays here till I go home—after that it returns to Bombay House.

Do you have dogs at home?

Yes, I have two German Shepherds. We are trying to, from the Trust, build a full-fledged hospital in…

Navi Mumbai? I know. People for Animals is working along with you.

You know about People for Animals?

Well, I founded it. Maneka Gandhi runs it. It is her’s now. You gave us our first ambulance.

Really? This is a small world. You love dogs too?

I know almost every dog from Haji Ali to Colaba. We feed some of them too. The strays I mean. We have been doing it for years.

I used to do the same. I used to feed over twenty dogs at the US Club in Colaba. Till they were poisoned to death. I have never set foot there since.

That is a shame. It keeps happening to strays everywhere. They are poisoned, beaten, clubbed to death. But there are good people too.

I know.

Who are your favourite painters?

Laxman Shrestha is one for sure. But art has become too expensive to buy. I used to collect art. Akbar Padamsee is another favourite. But I only have one or two of his paintings. I cannot afford art any more.

What else do you collect?

Architectural stuff. I love designing houses. The house I live in now is designed by me. It was once a condemned cottage by the sea. I also designed my first and only legal house in Alibaug. It is a small cottage, only 1,800 square feet, whereas everyone there is now building palaces.

And the one you live in is the second house?

Well, I have some land in Seychelles where I am trying to build a place. Normally they don’t allow non-nationals to build homes there but a special permission was obtained. When I retired, I wanted to relearn the piano and got myself a music teacher who could teach me how to play the piano without having to read music.

What kind of music do you like to play?

Music from the 60s and 70s. The Beatles, for instance. But deep down inside, I would find a sense of accomplishment if I could play classical music.

You can’t?

I never got to that stage. I love Chopin. I love symphonies. Beethoven, Tchaikovsky. But deep down inside, I would feel wonderful if I could play all that on the piano. The truth is I can’t.

Do you watch movies?

Not in theatres. But at home, on TV. Action movies. A little bit gory perhaps. But don’t ask me to remember names. But given what we have been talking about, I would urge you to read a book. I have read it at least five times and every time I read it my eyes moisten. It’s a book written as a dog called The Art of Racing in the Rain. I have never been moved so much by anything I have read in my entire life. I am sure you will be too.

Religion?

I am not religious at all, not in a formal, ritualistic sense.

What do you remember about your parents?

When I was very young, they got divorced. There was a lot of enmity, a lot of bitterness. The best thing that happened to me was that I went to the US at 15. It gave me the freedom to decide things for myself instead of getting trapped into whose side I wanted to be on. Divorce was normal out there.

So I came back from there with a different view on life and marital relations and parents. I was close to my mother out of guilt for having ignored her for so many years when I lived with my father. For most of my life I had a somewhat cool relationship with my father but in later years we became close. Both my parents had remarried and had families of their own. He married Simone and my mother married JJ Jamshedjee Jeejeebhoy.

And, finally, what is your idea of India?

I am very bullish about India. As Manmohan Singh said, the time for India has come. If you remove some of the controls, India will realise its true potential. Investment in infrastructure and education will lead to great change for the people. But the micromanagement of the economy—whether it is by the politicians or the bureaucrats— must stop. Only then will India achieve what it is truly destined for.

(This interview was originally conducted for the forthcoming book Peerless Minds: A Celebration, edited by Pritish Nandy and Tapan Chaki, to be published by Harper Collins. The book is supported by a grant from Sunil Kanti Roy of the Peerless Group. All royalties from the book will go to the Ramakrishna Mission’s Sister Nivedita School for Girls)

About The Author

Pritish Nandy